The World Economic Forum, 20th Global Competitiveness Report, attempts to shed light on the main positive and negative economic impacts of COVID-19 in 2020.
This year’s survey was conducted between February and July 2020, and it includes responses from 11,866 business executives across 126 economies. The survey aimed to determine whether there were any contrasting economic impacts of COVID-19 on developing economies compared to advanced economies.
“The survey aimed to determine whether there were any contrasting economic impacts of COVID-19 on developing economies compared to advanced economies”
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The survey found that the economic impact of COVID-19 varied across regions, and the consequences have been dependent largely on a region’s economic position
The adverse economic impacts of COVID-19 in 2020 are obvious, bearing in mind that the global pandemic and its accompanying great lockdown, disrupted business like never before.
Developing economies experienced an increase in crime and governance during the pandemic and a reversal of prior economic progress
But for advanced economies, the negative economic impacts of COVID-19 have been a decline in competition, followed by a reduced collaboration between companies and a growing challenge in finding and hiring skilled workers.
For example, based on 2020 data versus three-year average, competition in-network services -2.9%.
“for advanced economies, the negative economic impacts of COVID-19 have been a decline in competition”
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Collaboration between companies was also down -2.6%.
Moreover, competition in professional services fell by -2.3%, and competition in retail services declined -1.8%. But while unemployment rose it also became more difficult finding skilled employees, which registered -1.5% due to the restricted mobility of workers.
“COVID-19 accelerated the retail brick-and-mortar meltdown” – Wealth Training Company
One of the negative economic impacts of COVID-19 in advanced economies was the reduction in business competition due to the online moguls
Put simply, it accelerated the retail brick-and-mortar meltdown.
So, the oligopolistic nature of Ecommerce, where the entire market is dominated by a select number of retailers, has reduced competition. Because of this, larger retailers like Amazon have seen massive boosts in their online sales, while many smaller brick-and-mortar businesses have been struggling.
The negative economic impacts of COVID-19 in advanced economies are centered around market concentration and talent gaps. Meanwhile, crime, governance, and a setback in economic development have been the negative economic impact of COVID-19 in developing countries.
What are the positive economic impacts of COVID-19 for both developed and developing economies?
Surprisingly, a greater number of business leaders perceived more positive developments in developed economies this year than negative ones, according to the Economic Forum survey.
For example, the government’s responsiveness to change is up 8.2% and collaboration within a company is also up 4.6%. In advanced economies venture, capital availability is up 4.4% and soundness of banking is also up 4.0%. Moreover, social safety net protection is up 4.2%.
The positive economic impacts of COVID-19 for developing economies included;
Collaboration within a company up 6.9% and the Government’s responsiveness to change also up 6.8%. The efficiency of train transport services was up 5.9% and the country’s capacity to attract talent was up 5.8%.
In short, the negative economic impact of COVID-19 was cushioned for advanced and developing countries if they embraced digitization and workers possessed digital skills
Social safety nets and financial soundness together with a robust healthcare system all helped cushion the negative economic impact of COVID-19.