Nino Nakashidze

Prof. Nino Nizharadze

Group N4 (5)

December 5, 2023

The global economy and the financial world during and after the covid pandemic

Economics and finance have an impact, on the world stage shaping the well being and stability

of nations. Economics, which examines how societies distribute resources guides decision making at

the governmental levels. On the hand finance manages money and investments to enable activities

through mechanisms like capital allocation, risk management and wealth creation. The

interdependent nature of economics and finance is crucial, for societies as it drives growth

encourages innovation and supports the stability of financial systems globally. The COVID 19

pandemic has had an impact, on aspects of society including public health, the economy, trade,

finance and the environment. In this synthesis essay we will delve into six research abstracts that

examine the consequences of this crisis. These abstracts cover topics such as convergence, trade

credit financing, stock market volatility and commodity price dynamics. Through these studies we

gain insights, into the interconnected challenges presented by COVID 19.

The COVID pandemic has become a global problem for the whole world, and its control has

been complicated by its sudden appearance. That is why Yuqin Zhou speaks in his article "The

global economic policy uncertainty spillover analysis: In the background of COVID-19 pandemic"

The general economic background to the impact of the Covid-19 pandemic is interesting because it

shows the biggest impact of the pandemic on the economic and financial sector. “In recent years, the

problem of global uncertainty has become increasingly prominent. E.g., the lack of momentum of

world economic growth, the emergence of regional hot issues, especially the outbreak of COVID-19
epidemic which looks as a special case of a dual health and economic crisis (Atri et al.,

2021), "During the covid pandemic, limited international trade, closed borders have caused a

significant economic downturn.( Zhou, 2022)

Warwick McKibbin in his article "The Global Economic Impact of the COVID-19 Pandemic"

talks about the general factors caused by the pandemic, such as the decline in living standards, the

social presence of the population especially in 2019-2020. The analysis of the COVID 19 pandemic,

which has led to social disruptions worldwide is examined using the G Cubed model. The impact,

on labor, productivity and policy responses are taken into account with an emphasis on the

importance of public health measures in restoring confidence. The significance of coordination is

underscored. Comparisons are made between projected GDP figures and actual outcomes offering

valuable insights, for future challenges. “We assess five main pathways via which the pandemic

affects the global economy: (1) changes in labor supply, (2) changes in sectoral total factor

productivity, (3) changes in consumption, (4) changes in country and sector risk premia, and (5)

changes in fiscal policies”. (McKibbin, 2023)

The convergence of economic globalization in high and low globalized developing economies,

and therefore countries, was evident at the onset of the Covid pandemic. The study underscores the

significance of tackling the distribution of globalization policies. It proposes that developing regions

should adopt strategies to minimize the effects of the Covid 19 pandemic in order to sustain a pace

of globalization in the future. It is advisable to implement policies that are tailored to clubs and

sectors in order to achieve a fast convergence rate and make use of economic globalization.

One crucial topic worth investigating is how the COVID 19 pandemic affects trade credit

financing. A study has found that the pandemic has an impact, on increasing trade credit financing

for affected companies, which can be attributed to the costs associated with traditional bank loans.

This finding has implications for managers supply chain partners and investors emphasizing the
need, for flexible financing options during times of crisis. This abstract highlights how businesses

adapt to shocks and rely on financing methods when faced with unprecedented challenges.

Speaking of the financial sector, no less important is the effect of COVID – 19 pandemic on

global stock market volatility. It also investigates how certain economic characteristics at a country

level can potentially lessen the impact of this volatility. The study suggests that specific economic

factors have proven effective in reducing instability caused by the pandemic. Policymakers now

have a framework to develop strategies in order to stabilize global stock markets. “We have

examined the effect of this pandemic on stock market volatility and whether economic strength,

measured by a set of selected country-level economic characteristics and factors such as economic

resilience, intensity of capitalism, level of corporate governance, financial development, monetary

policy rate and quality of health system, can potentially mitigate the possible detrimental effect of

the global pandemic on stock market volatility”.( Uddin, 2021)

Due to such fluctuations in the economy, the purchasing power of money in the world economy

has changed, inflation has increased, which in most cases has led to a fall in the level of gross

domestic product, a decrease in purchasing power and an increase in the instability of economic

resources. The study, on Economic Performance explores the connection between fluctuations in

natural resource commodity prices and the global economy during the pandemic. Surprisingly the

findings show that only commodity prices are vulnerable without any impact on global economic

performance. This research offers policymakers insights to manage commodity price volatility and

minimize its effects, on economic stability. “In recent times, the world has been facing two major

shocks: (i) the outbreak of Covid-19 pandemic and (ii) the drop in the global natural resource

commodity oil price (Sharif et al., 2020)” (Li Sun , 2021).

 In conclusion, the synthesis of these abstracts presents a comprehensive view of the global

impact of the COVID-19 pandemic. From economic convergence to trade financing, stock market

dynamics, commodity prices, and factors influencing the virus spread, these studies contribute

valuable insights. The interconnectedness of these dimensions underscores the need for holistic and

coordinated responses to effectively address the multifaceted challenges posed by the pandemic. As

the world continues to grapple with the ongoing crisis, these research findings provide a roadmap

for policymakers, businesses, and societies to navigate and recover from the unprecedented

disruptions caused by COVID-19.

References

Zhou, Y., Liu, Z., & Wu, S. (2022). The global economic policy uncertainty spillover

analysis: In the background of COVID-19 pandemic. Research in International Business and

Finance, 61, 101666.

https://www.sciencedirect.com/science/article/pii/S027553192200054X

McKibbin, W. J., & Fernando, R. (2023). The global economic impacts of the COVID-19

pandemic. Economic Modelling, 129, 106551.

https://www.sciencedirect.com/science/article/pii/S0264999323003632

Lau, C. K. M., Pal, S., Mahalik, M. K., & Gözgör, G. (2022). Economic globalization

convergence in high and low globalized developing economies: Implications for the post

Covid-19 era. Economic Analysis and Policy, 76, 1027–1039.

https://www.sciencedirect.com/science/article/pii/S0313592622001795
 Xie, W., & Tian, H. (2023b). The effect of the COVID-19 pandemic on corporate trade

credit financing. Economics Letters, 232, 111339.

https://www.sciencedirect.com/science/article/pii/S0165176523003646

Uddin, M., Chowdhury, A., Anderson, K., & Chaudhuri, K. (2021). The effect of COVID – 19

pandemic on global stock market volatility: Can economic strength help to manage the

uncertainty? Journal of Business Research, 128, 31–44.

https://www.sciencedirect.com/science/article/pii/S0148296321000692

Sun, L., & Wang, Y. (2021). Global economic performance and natural resources commodity

prices volatility: Evidence from pre and post COVID-19 era. Resources Policy, 74, 102393.

https://www.sciencedirect.com/science/article/pii/S0301420721004025