Nino Nakashidze

Prof. Nino Nizharadze

TA. Ketevan Dogonadze

Seminar 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)

Wenlan Xie confirms the opinion that Covid has had and has a huge impact on the financial

world. In his article "The effect of the COVID-19 pandemic on corporate trade credit financing"

he talks about increased loans, higher interest rates. 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. Moshfique Uddin said "Examining volatility is important as a

sudden and significant increase in volatility may lead to a financial crisis". (Uddin, 2023). 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). We come across the same idea in “Risk and

Financial Management of COVID-19 in Business, Economics and Finance” by Chang et al.

(2020), he confirms that countries where financial markets are well regulated and advanced, the

success of financial stocks reflected how well national governments have handled the COVID-19

situation.

He also discusses the risk and financial management of COVID-19 in business, economics,

and finance. It highlights the significant global impact of COVID-19 on various sectors including

tourism, travel, hospitality, supply chains, and financial markets. The paper introduces a Special
Issue of the journal dedicated to this topic, inviting original research papers. It also discusses

several studies related to COVID-19’s impact on industries, global health security, and risk

management. The authors acknowledge the financial support of Taiwan’s Ministry of Science

and Technology.

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. “An increase in the natural resource commodity price, particularly, may

well have a negative impact on economic activities. Still, a drop in the price of natural resource

commodities does not always imply greater output levels.” (Sun, 2021). Author, Li Sun in the

article "Global economic performance and natural resources commodity prices volatility:

Evidence from pre and post COVID-19 era" 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)” (Sun , 2021).

In short, when we look at the summaries of all these studies together, we get a big picture of

how COVID-19 has affected the world. It's not just that people get sick; It has touched many

aspects of our daily lives globally. We also have seen how money has affected things like

holding the economy together and supporting business, especially in 2020-2022, when the

pandemic was most widespread. Even the stock market, where the values of companies are
shown, moved in different ways. The prices of everyday things, like the things we buy, also

change and different things affect the way the virus spreads. It can be said that this period is a

recession for the 21st century, when the level of inflation was much higher than usual.

All these studies provide us with really useful information. They show how everything is

connected. This tells us that we have to deal with all these problems together and not at the same

time. This is important because we are all still dealing with the virus, and these studies can help

leaders, businesses, and ordinary people figure out how to get back to normal after all the

craziness that has happened due to COVID-19. So even though it's been a tough time, these

research findings are like a map to help us find a way out of this mess and make things better for

everyone.
References

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

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

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

Chang, C., McAleer, M., & Wong, W. (2020). Risk and financial management of COVID-19 in

Business, Economics and finance. Journal of Risk and Financial Management, 13(5),

102.

https://www.mdpi.com/1911-8074/13/5/102

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