COVID-19 has altered our lives. Battling the pandemic is sinking holes in national economies, as the outflow of capital is causing rising fiscal deficits. By June 2020, the International Monetary Fund (IMF) received applications for emergency funding from over 100 countries. Some may call that dire.
And things will not return to the ‘normal’ we are used to, any time soon. Some countries are going into overdrive to develop and distribute the vaccine, some are squabbling over the ratio of distribution. All of these processes cost money. And the worst hit may be the developing countries, especially in Africa, where digitisation and financial inclusion were otherwise on a steady rise.
While financial growth can be spurred on by the very nature of the virus – less body contact usually equals swift adoption of digital options – the most vulnerable will be hard hit; for most, a matter of life or death.
Here are projections on what could be obtainable in 2025:
Four-Year Projections
- Economic reforms
Economic activities across the world will continue with fewer face-to-face interactions. Some sectors will regain strength, others will be on standstill. There will be an increased need for equal access to digital infrastructure; improved financial and digital literacy. There will be a need for policies that cater to a wider spectrum of needs.
- Economic Momentum
Domestic economies will have gained momentum, propelled by the digital economy. And new heavyweights could emerge.
- Widely Available Vaccines
The use of vaccines will increase globally but delays to vaccination deployment, difficulties controlling new virus outbreaks and failure to learn lessons from the first year may have an adverse effect overall. Travel protocols will also change, with most airports and borders incorporating systems to ensure they keep the virus away.
- Positive Economic Growth
The rebound will be stronger and faster as more and more activities re-open, limiting the aggregate income loss from the crisis. The recovery will be uneven across countries, potentially leading to lasting changes in the world economy. However, the countries that learn from their mistakes, quickly, and develop long-lasting inclusive solutions will lead the pack.
- Socio-economic Damage
There will be deep-rooted damage to the socio-economic fabric of countries worldwide. It’s inevitable.
Currently, millions of low wage earners have lost their jobs and are only covered by unemployment insurance, at best; with poor prospects of finding new jobs soon. Children and youth from less well-off backgrounds, and less qualified adult workers have struggled to learn and work from home, with potentially long-lasting damage. The principles of cause and effect are simply at play here.
- Currency Pressure
Currency pressure to persist and inflation will continue to rise. Exchange rates flexibility is expected while policy convergence will limit exchange rate movements in the major economies, more currency volatility is expected in emerging markets.
It will be a long ‘trek’ to recovery. Fortunately, we have always been a resilient people.