Will global unemployment break records post-COVID-19? - ERDAL TANAS KARAGÖL

Will global unemployment break records post-COVID-19?

In the midst of the coronavirus outbreak, a new era has been ushered in for the global economy. While many economic and social indices have been revised, new economic policies and measures are being implemented accordingly.

In this period, economic growth, which is the most important indicator in determining performance, economic viability, increase in jobs and per capita income, namely the wealth of countries, shows serious fluctuations.

In terms of economic growth, certain countries continue to be negatively impacted in the first quarter of 2020, while others will continue to face similar struggles well into the second quarter of the year. Meanwhile, uncertainties remain as to how the new wave, should the Covid-19 pandemic recur, will affect economic growth trends in the 3rd and 4th quarters.

What’s the fate of economic growth in the first quarter of 2020?

Economic growth in China, the country where the coronavirus epidemic originated, fell by 9.8 percent in the first quarter of 2020. The severe contraction of the second largest economy in the world, which has grown 6-7 percent in recent years, by 9.8 percent, shows the magnitude the devastation of the epidemic has wreaked on China.

This 9.8 percent contraction announced by Beijing is marked by being the worst growth figure in the country since 1992.

Meanwhile, economic growth in the U.S., which is the current hotspot of the pandemic and hardest hit by Covid-19 after China, contracted by 4.8 percent in the first quarter of 2020.

After becoming the hotspot of the pandemic, the U.S.’s second quarter’s economic growth figures are expected to plummet to record levels.

It’s worth noting that there is not a very pleasant outlook for EU states either. Economic growth in European countries shrank by 3.5 percent in the first quarter of 2020: Germany by 2.2 percent; France by 5.8 percent; and the U.K. by 2 percent.

Turkey's first quarter growth figures are set to be released this Friday. Since the negative impacts of the pandemic were felt predominantly in March, Turkey, unlike other countries, will see positive figures for the first quarter of this year.

However, since production has been adversely affected in April and May, which are second quarter months, we can say that even though there is partial normalization in June, the forecast for the 2nd quarter economic growth will not be positive, as is the case globally.

Keeping a close eye on unemployment

It should come as no surprise that declining economic growth and the downward trend in growth forecasts owing to the volatility of the global economy post-Covid-19 would trigger rampant unemployment.

Unemployment is in fact expected to reach record levels due to the decline in global growth because of the strong correlation between economic growth and employment.

Is it not a sign of how serious this situation is that the number of Americans who have applied for unemployment benefits has reached 39 million since the coronavirus outbreak arrived in the U.S.?

The fact that U.S. unemployment soared to a high of 14.8 percent in April 2020, a first since the economic crisis of 1929, is a sign of the gravity of the social and economic problems the country is grappling with. In fact, the U.S. unemployment rate is expected to hit 20-25 percent in May-June.

Most important still is the possibility of a second Covid-19 wave. This situation makes it all the more necessary to take serious precautions while underlining the possibility of a further increase in global unemployment and the deepening decline in economic growth.

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