Signs of global recovery a year on from the pandemic

It’s more than a year since the World Health Organization declared the coronavirus (COVID-19) outbreak a global pandemic in March 2020. Its spread has left national economies and businesses around the world counting the costs, as governments struggle with new lockdown measures to tackle the spread of the virus.

Its impact can be seen on markets around the world - the FTSE, Dow Jones Industrial Average and the Nikkei all saw huge falls as the number of Covid-19 cases grew in the first months of the crisis. The major Asian and US stock markets have recovered following the announcement of the first vaccine in November, but the FTSE is still in negative territory.

Central banks in many countries have slashed interest rates which should make borrowing cheaper, boost spending and, in turn, boost the economy.

But there is another issue facing most countries - rising unemployment which can be seen from the US and Canada, to Japan and across Europe.

According to the International Monetary Fund most countries around the world are in recession. In fact, the only major economy to grow in 2020 was China, registering growth of 2.3%. According to UN figures China is also now the world’s top destination for new foreign direct investment, overtaking the US.

In Malaysia, too, there are signs of optimism - more than two-thirds of SMEs in Malaysia expect their businesses to recover from the effects of the pandemic in the next few months. according to a Mastercard Impact Study.

The study of 452 small business owners, conducted at the end of 2020, found positive levels of optimism among Malaysian SMEs with 80% saying that they have sufficient resources to see out the rest of 2021.

But not all economies are feeling so optimistic - the rate of inflation in India has assumed ‘worrisome’ proportions, according to financial intelligence firm Moody’s Analytics. India’s retail inflation rate, which has been driven by rising oil and food prices, has been above the Reserve Bank of India’s (RBI) 4% inflation target for the past eight months, the analyst firm said.

So, as each country looks to emerge from the pandemic they face the twin challenges of how to re-open their economies to encourage growth while still tackling the virus and trying to control its spread.