There were warning signs.

Asian countries had battled a terrible and widespread SARS (sudden acute respiratory syndrome) outbreak that started in 2002 and lasted for two years. A decade later, the first case of MERS (Middle East respiratory syndrome) was reported. Meanwhile, African nations, still battling AIDS after all this time, had their hands full with Ebola since the disease was first identified in 1976; the 2013-2016 outbreak is, to date, their most severe.

That epidemic prompted then-president Obama to formulate an epidemic response programme should a more dramatic, virulent and deadly pathogen hit that country's shores.

Ebola arrived in the US in 2015, when medical personnel and medically evacuated patients returned there from Africa. The disease was fortunately well contained; even the two healthcare workers who came in contact with an infected patient and contracted the disease were soon cured of it.

Those were warning signs.

Some governments, like those of the US and Asian countries, had public-health-emergency contingency plans in place. When COVID struck, those for the US were ignored by the succeeding administration; those in Asia were implemented with maximum efficiency. The rest of the world fell between those two extremes in their COVID response.

COVID economy fast facts
1. COVID has caused three times the amount of economic destabilisation that the 2008 global financial meltdown did.
2. Europe and emerging markets endured the worst economic ravages. The US fared slightly better and China suffered no recession.
3. Leisure, hospitality and travel industries were hardest hit while the tech sector and healthcare industries are enjoying a boom.
4. Lockdowns and social distancing protocols are two reasons for global supply chain troubles.
5. COVID's impact on the Russian economy may have been a catalyst of war.

We know the terrible toll COVID exacted on our lives but what was its toll on the global and local economies? And how did those impacts contribute to the war in Ukraine?

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How World Regions Handled COVID

Those countries that had recently experienced epidemics were the best prepared. That is to say, those that experienced recent epidemics and had the medical, intellectual and economic resources to prepare for the next one, did so.

East Asian nations were prepared for airborne illnesses
East Asian countries had experience with respiratory illness going into the pandemic. Photo by cheng feng on Unsplash

East Asia

China, South Korea and Japan, East Asia's three economic powerhouses, each handled their outbreaks very differently.

China, where the virus was first detected, was slow to publicise its outbreak but quick to implement containment strategies. Life came to a crashing halt as entire cities - millions of people at a time, were confined to their homes for months on end. Government workers brought them food and conducted periodic welfare checks on select demographics, mostly seniors and other vulnerable populations.

South Korea seamlessly adopted their continuation of operations plan (COOP): mask-wearing, social distancing, contact tracing and periodic public area disinfection (public transportation, government offices and hospitals). Japan, geographically isolated but affected by the coronavirus nonetheless, adopted the more piecemeal approach that western countries espoused.

These nations had the economic resources to fund their initiatives and keep their economies strong through the worst of it. Indeed, China's economy has yet to see any kind of recession and South Korea bounced back rather quickly.

Elsewhere in east Asia - Vietnam, Laos, Thailand, Cambodia, low population density and speedy implementation of safety measures ensured their citizens suffered only low infection numbers and minimal economic disruption.

The Middle East

Western Asia, more commonly referred to as the Middle East, saw its share of COVID turmoil, too. Both of the economic and socio-political varieties, along with a fair amount of illness.

  • Israel was one of the most severely affected countries in the world.
  • Iran, already creaking under the weight of US economic sanctions, borrowed heavily from their country's National Development Fund to cover the cost of their COVID war.
  • Saudi Arabia, one of the region's richest nations, was quick to close its borders, barring entry to any travellers potentially bringing the virus in. Cancelling religious high holidays caused substantial social unrest as well as huge economic losses; nobody made any pilgrimages for two years.
  • UAE, whose property sector was already under substantial economic pressure, found COVID roiling that market. Their government took quick action to both offset the 58% loss to that industry and instil public health measures. This country's death rate has remained consistent over the entirety of the pandemic, at roughly 2000 per month.

As in the far east, so too here: those countries with strong economies, that implemented swift and effective safety measures, were the ones that fared the best in their war against COVID. Countries with less dense populations and minimal travel infrastructure saw fewer cases but greater economic turmoil.

Elsewhere in the World

African countries took a dramatic economic hit, even though South Africa, the country most severely stricken, lost fewer to COVID than most developed nations (just under 100,000).

Europe soon distinguished itself as the pandemic epicentre and, despite this region's wealth, development and access to vaccines as soon as they were available, suffered profound economic losses. Furthermore, pandemic-induced economic unease among the citizens has fuelled social unrest, which also affects the economy.

The Americas saw an uneven response. The US holds the dubious title of most inadequate response, borne out by the number of cases and deaths - fully one-sixth of the world's total (the US is home to only 4% of the world's population). Frequent stimulus and bailout payments, coupled with their already low Central Bank interest rates give this country little room to manoeuvre in its pandemic recovery efforts.

South American countries had been running on a stagnant economy before COVID hit; the pandemic has caused a massive contraction to their economic forecast.

Pandemic responses in Australia and New Zealand were mismatched, with the latter country performing far better than its larger neighbour. In Australia, accusations of racism and preferential treatment put public health initiatives on the back burner, thus prolonging the pandemic far beyond what an isolated island nation might have endured.

For most of the world, a piecemeal approach to the virus was the order of the day
Other world regions adopted a more piecemeal approach to combatting the virus. Photo by Julian Wan on Unsplash

COVID Global Economic Impact

Locally and globally, the hospitality and travel industries were the hardest hit of all. Nobody was eating in restaurants - though a fair number had restaurant food delivered. Few were flying or taking driving trips, meaning that hotels remained virtually guest-less for months on end.

Municipalities around the world saw sharp drops in revenue. Work-from-home initiatives were wonderful in so many ways but the lack of commuting, including buying petrol, paying tolls and public transportation fares; paying for parking and other municipal fees - everything from utilities in office buildings congestion fees in high-traffic areas.

The petroleum industry, too, was affected because few were driving or flying. Manufacturing came to a virtual standstill; no country would risk putting their workers close to each other. Food production remained the only continuous manufacturing output but other factories went back to work as soon as they could modify their processes to maintain social distancing mandates.

Small businesses shuttered, gig workers ran themselves ragged and medical staff worked under tremendous pressure and excruciating mental stress.

Every one of these negative economic indicators caused an inverse rise in adverse economic effects.

The world entered a global recession that began affecting some countries as early as February 2020 - right from the start. That's when the stock markets crashed worldwide and, even though there was a quick recovery, it was uneven and continues to be so today. To wit, inflation rates in the US and UK are staggering while, in Europe, those countries suffer slightly higher than their pre-pandemic inflation rates and wealthy Asian countries see virtually no inflation at all.

Economies of poorer countries worldwide have yet to recover.

The energy industry, all of the aspects of energy production from fossil fuels to nuclear, was impacted particularly hard when energy demands ramped up as countries emerged from the pandemic recession. This led to what is now referred to as the 2021 global energy crisis.

This ongoing crisis forms part of the tensions driving the Russo-Ukrainian war.

Peski and other Russian streets were deserted during the pandemic
Across Russia, streets were as deserted as this one in Peski at the height of the pandemic. Photo by Mehrnaz Taghavishavazi on Unsplash

COVID's Economic Impact on the Russian Economy

The sudden stop of all economic activity had a devastating impact on the whole world but Russia, in particular, suffered because of their comparatively few trading partners and limited goods for sale.

Demand for oil, their mainstay, dropped precipitously. OPEC countries were feeling the pinch as well, leading them to organise a summit to discuss cutting back oil production, early in the pandemic. OPEC members all agreed to limit production but Russia refused to comply with OPEC's request to follow their lead.

This stalemate led to the Saudi-Russian Price War which, in turn, led to the 2020 stock market crashes.

Amidst the loss of trade with China and Saudi Arabia undercutting the price of Russian oil, Russian leaders did everything they could to prop up their economy as COVID raged on.

Russia had been labouring under the weight of sanctions, mainly imposed by the US and the European Union, for several years before COVID struck. Furthermore, diplomatic initiatives in South America and Africa had either not yielded satisfactory results or stalled altogether, such that Russia could not develop new alliances or economic plans.

Now, unable to sell its oil at a price that could sustain them and with their economy crumbling, the government had no choice but to call upon his oligarchs' vast holdings.

All of these events conspired to make President Putin feel increasingly isolated and under threat. He believed that enforcing a buffer zone between his country and the richer, well-armed NATO nations to the West would protect his lands from aggression.

NATO-Russia diplomatic talks broke down. Soon, Russian troops massed on Ukraine's borders.

Now, discover how the Great Depression led to the Second World War.

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