Given the global public health statistics that have emerged this week it is perhaps a good time to review how the world economy is going. Of course the situation varies from one place to another but some general trends are perceivable. In general terms many countries have seen a bounce back since the worst economic effects in the first and especially the second quarter of the year though there is a long way to reach pre-pandemic economic levels. Few countries have avoided recession with the exception of China but some have done better than others.
That the pandemic has caused widespread economic pain is clear enough though. The International Labour Organisation (ILO) released a statement this week that global wages have dropped by around 10% in the first nine months of this year, equating to a drop of around 5.5% in Gross Domestic Product (GDP) globally – though it should be noted that the figures on wages do not take account of the various wage support schemes that have been put in place by governments around the world. Unsurprisingly of course there has also been a drop in hours worked, calculated to be around 17.3% from pre-pandemic levels which the ILO suggests is equivalent to shedding almost half a billion full-time jobs across the planet. This will feed through to consumer spending and will inevitably impact on the pace of any global recovery. Resurgences in Covid in various countries also continue to have a negative effect on statistics such as hours worked. The trend is also noticeably worse in poorer countries where remote working which might be possible elsewhere is not so readily available as an option. In less developed economies the impact on wages is thought to be on average around 15% whereas in more developed ones it is closer to 9%. A knock-on effect which makes the gap worse is that workers in richer countries are more likely to have access to government wage support schemes than elsewhere. Fiscal stimulus packages in more developed countries have also, according to the ILO, boosted working hours to around 10% higher than they might otherwise have been whilst in poorer countries they have only boosted them by about 1.5%.
In other words the gap between rich and poor countries appears to be widening because of the pandemic which is a contrast to trends in recent years. As supporting evidence of this trend, the World Bank has also put pressure on creditors of emerging economies to defer debt repayments as otherwise those benefitting from such loans are faced with a 'lost decade' as a result of the pandemic's effects. Few countries have indeed escaped the economic effects of Covid; but whilst the impact may be deeply unwelcome everywhere, the workers of some countries are likely to be more catastrophically affected than others.
Wayne Bartlett is an author for accountingcpd. To see his courses, click here.
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