The COVID-19 pandemic has put millions of lives in danger. It almost brought the economies to a standstill because of strict measures taken by the governments such as mandatory lockdown and border closure to stop the virus from spreading further.
IMF states that the COVID-19 recession is worse than the financial crisis of 2008. The global economy declined by 4.4% in 2020, the worst since the Great Depression of the 1930s. Moreover, various developing economies were already experiencing a slump in their growth rate before the pandemic hit. Hence, it has put them in an even more vulnerable position.
Despite the best efforts of the governments to refute the slump with the improved fiscal and monetary policies, it has been one of the gravest global recessions in decades. We are yet to see the post-COVID-19 recovery with the development of new vaccines.
Impact of COVID-19 on the global economy
Many countries suffered the negative effects of COVID-19 in the forms of multi-dimensional environmental and social issues and severe GPD downfall. Millions were quarantined, borders closed, schools digitalized, airline/manufacturing/ travel industries dysfunctional; entertainment and sports events canceled, tourist locations empty.
The United Nations’ Department of Economic and Social Affairs has determined that we may see a rise in inequality, discrimination, exclusion, and global unemployment if not addressed by countries with effective policies. Global poverty is expected to increase for the first time since 1998. The World Trade Organization (WTO) has projected a 32% decline in global trade.
The government needs to carry out comprehensive reform programs to recuperate the fundamental drivers of economic growth. During the recovery period, the countries should concentrate on sustaining economic activity alongside firms, households, and essential services.
Unemployment rates have increased across major economies. According to IMF, the US went from 3.7% to 8.9%, UK from 3.8% to 5.4%, and Canada from 5.7% to 9.7%. India’s unemployment rate rose from 5.36% to 5.4% in 2020. Government job retention schemes are useful to support workers.
The stock markets performed poorly. The FTSE dropped 14.3% in 2020. It’s the worst performance since the 2008 financial crisis. The central banks of many countries have slashed their interest rates to make borrowing cheaper and encourage spending to boost circulation in the economy.
1. Aviation
- International Civil Aviation Organization (ICAO) predicted a loss of $76 billion and an overall decline in passengers from 44% to 80% in 2020.
2. Tourism and Hospitality
- The tourism industry is experiencing a knock-off of the aviation industry because of COVID-19. This is the worst state of international tourism since 1950. A 60% drop in tourists has been projected to be experienced this year.
- Research shows that over 35 million hotel and rental listings worldwide have registered a fall in reservations in all principal travel destinations. It is estimated to reach the pre-pandemic condition in 2025.
3. Pharmaceutical
- With the government investing in the pharmaceutical industry, the companies involved in vaccine development have shown a substantial growth rate as anticipated. The forecast shows the pharmaceutical sector will grow by 160% from 2017 to 2030.
4. Oil and Natural Gas
- The collapse in oil and natural gas demand and prices is only beneficial in the short run. It offers an opportunity for oil producers to diversify their economies.
- Consumers are still conscious of returning to physical stores for shopping. This has significantly boosted the online retail sector with global revenue of $3.9 trillion in 2020.
- The IMF has predicted a global growth rate of 5.2% in 2021.
Rise of AI because of COVID-19
The world is undergoing a massive business transformation as visible by the success of internet businesses such as Netflix, Amazon Prime, Uber, Xbox. This global digital technology is now an integral part of our lives. Businesses are now using Artificial Intelligence (AI), Machine Learning (ML), speech recognition, identity tracking, and location tracking services in real-time. This opens doors to new applications and services in computer technology.
Digitalization has created 90% of the world’s data since 2016. According to IDC, COVID-19 is accelerating data growth. New technologies are reshaping the workforce with the digitalization of the economy. It is predicted that AI could add around 16% or about $13 trillion to global output by 2030.
- Using AI to complement the efforts to eradicate world hunger can help with increased productivity in areas of agriculture and food production.
- AI can develop precise indicators to realize poverty distribution. This can determine resource allocation.
- AI is expected to improve signaling through applications of smart sensor technology and advanced analytics. Hence, it is becoming popular in the transportation sector.
- Students have the right to new opportunities and to receive high-quality education through AI in these trying times.
- In businesses, AI-based financial advisors can monitor financial reports and suggest better prospects to improve the financial condition of the organization.
- AI is also used in the efficient management of natural resources and handles accountability for harmful activities.
- AI can boost global trade and commerce by improving supply chain efficiency, analyzing risks, and reducing the complexities of global contracts.
- The Healthcare industry is the fastest growing industry in the AI software market during 2019-2021 because of COVID-19. It has put the sector under immense pressure to improve its services across the globe. Healthcare professionals are adopting technologies so they could minimize the risk of exposure to viruses. The use of smart robots, makeshift ventilators, and telemedicine is increasing. Healthcare organizations use AI and ML to analyze, monitor the impact, diagnose and treat patients.
The highest potential for growth of AI can be foreseen in the following sectors:
- Retail
- Transport and Logistics
- Travel
- Consumer Packaged Goods
- Public and Social Sector
The AI software market size is expected to grow up to USD 665 million by the end of 2021 at a CAGR of 19%.
Conclusion
The current global situation is persistent on the development of robots and AI technologies to save lives and make tasks easier. In the post-COVID-19 era, we need to work on a robust and low carbon economy. It is critical to implement reforms that will enhance sustainable growth once the health crisis subsides.
According to Lean Bonds, the global AI software market value will rise to $126B in 2025 from $22.6B in 2020. This clarifies that COVID-19 has and will continue to push further towards the employment and development of AI.
