Five years after the World Health Organization declared COVID-19 a pandemic, its repercussions continue to have significant effects on the global economy. The pandemic and subsequent efforts to control it led to surging government debt, disruptions in labor markets, and alterations in consumer behavior. Inequality has worsened, but remote work, digital payments, and changes in travel habits have become enduring trends.
While the initial shock has subsided, COVID-19’s legacy is ongoing, reshaping economies and markets worldwide. One major consequence is the increase in global government debt, which has surged by 12 percentage points since 2020. Emerging markets have experienced even steeper rises in debt levels.
Inflation levels spiked post-pandemic due to various factors like government stimulus and supply chain shortages, becoming a pivotal issue in the 2024 U.S. elections. To tackle escalating prices, central banks raised interest rates, leading to varying impacts across different countries. As economies grappled with lockdown-induced challenges and rising debt, sovereign credit ratings deteriorated.
Current data from Fitch Ratings indicates that average global sovereign credit scores are still lower than pre-pandemic levels, with poorer nations facing even steeper declines. Labor markets saw millions of job losses, disproportionately affecting women and lower-income households. While employment rebounded in sectors like hospitality and logistics, challenges remain, including a continuing gender employment gap.
Changes in travel patterns have been notable; for instance, public transport usage in cities like London remains significantly reduced compared to pre-pandemic levels. The airline industry faced massive losses, but with the lifting of restrictions, it is projected to make a recovery by 2025. Furthermore, digital shopping trends accelerated during lockdowns, reinforcing the reliance on online purchases.
This shift led retailers in Europe to increase their physical presence to stimulate sales across both online and offline platforms. Despite the challenges faced by some digital companies, others have experienced sustained success, capitalizing on new market opportunities created by the pandemic-driven digital landscape. Additionally, retail trading boomed, with more Americans participating in the equity market and platforms like Robinhood gaining popularity.