COVID-19 recession

COVID-19 recession

The COVID-19 recession was a global economic recession caused by COVID-19 lockdowns. It began in most countries in February 2020. Lockdowns and other safety measures slowed down business and travel. This caused a big drop in money for countries and many people lost their jobs.

One of the first signs of trouble was the 2020 stock market crash. The value of companies dropped quickly. By April 2020, things began to improve. By April 2022, many big economies were doing well again.

During the recession, unemployment went up fast in many places. In the United States, millions of people lost their jobs by late 2020. This put pressure on systems that help unemployed people. The drop in work also affected developing countries. It made food harder to get in some places.

The recession caused big changes in some industries, like oil and tourism. People were traveling less and using less energy. As the world recovered, demand for energy jumped. This led to higher prices. This was made harder by events related to the Russo-Ukrainian War, especially the Russian invasion of Ukraine. Some experts thought it might take until 2025 or later to fully recover.

Background

Corporate debt bubble

Main article: Corporate debt bubble

After the 2008 financial crisis, many companies borrowed a lot of money. By 2019, this debt was very high, about $72 trillion around the world. If the economy got worse, these companies might struggle to pay back what they owed.

2019 global economic slowdown

During 2019, the world’s economy grew very slowly, the slowest since the 2008 financial crisis. This slow growth was partly because of worries about trade between countries, like the China–United States trade war and Brexit. These worries made it hard for businesses to plan and invest.

Trump tariffs against China

Main article: China–United States trade war

From 2018 to early 2020, the U.S. put extra taxes on goods from China. This caused problems for many countries, including higher prices for things people buy and harder times for farmers and factories in the U.S. It also caused some protests in other countries because prices for things like transportation and energy went up.

Brexit

Main article: Economic effects of Brexit

In Europe, the UK’s plan to leave the European Union, called Brexit, made people unsure about the future. This uncertainty made it hard for businesses to invest money, which slowed down the UK’s economy in 2019. Other European countries also felt some effects, mainly because of worries about trade and manufacturing.

Aggravating circumstances

Evergrande liquidity crisis in 2021

Main article: 2020–2022 Chinese property sector crisis

In August 2021, a big company in China called Evergrande Group owed a lot of money—about $300 billion. The company couldn’t make some of its payments, which worried people because China’s economy is very important to the world. This added more problems to the recession that started because of the COVID-19 pandemic.

2021–2023 global energy crisis and sanctions on Russia

Main articles: 2021–2023 global energy crisis, Russian invasion of Ukraine, and Economic impact of the Russian invasion of Ukraine

From 2021 to 2023, the world had trouble getting enough energy, like oil and gas. This was made even harder when Russia invaded Ukraine in 2022. The invasion caused the price of oil to go up a lot and made it harder for some countries to get energy from Russia. This created more economic problems around the world.

Causes

Further information: Social distancing measures related to the COVID-19 pandemic

The COVID-19 pandemic was a big problem for the world, like the Spanish flu in 1918. In late 2019 and early 2020, the world's economy was already slow, and people were spending less money. When the pandemic spread quickly, many countries put in population lockdowns to try to stop it. These lockdowns closed many industries and made people stop buying things, which hurt banks and jobs. This led to a crash in the stock market and caused a recession. With new social distancing rules, lockdowns happened in many parts of the world economy.

The COVID-19 pandemic was first found in Wuhan, China, in December 2019. It became a big health problem in January 2020 and a pandemic in March 2020. How countries tried to stop the pandemic caused big problems for the world's economy. Many events were postponed or canceled, and schools closed in many countries. The pandemic hurt almost every big industry, caused a crash in the stock market, and made it hard for people to move around freely.

The pandemic made the world's economy drop in 2020. Even though trade still happened, problems with what people wanted and what was available kept causing issues. During the first wave, businesses lost money and had to let people go, especially in services and small businesses. But help from governments stopped many companies from closing. Aid like keeping people employed, subsidies, tax help, and loan guarantees added up to a big part of the world's economy. Countries in Europe also faced big economic problems because of how they dealt with the pandemic.

While stay-at-home orders affected many businesses, like shops, restaurants, and hotels, people also started changing how they spent money before the rules were put in place.

The drop in travel and factory work because of the COVID-19 pandemic made people need less oil, so its price went down. The fight between Russia and Saudi Arabia over oil prices made things even worse. In March 2020, they couldn’t agree to make less oil, so they both decided to make more. This caused oil prices to drop a lot. Later, they agreed to cut production, but the damage was done.

Financial crisis

Main article: 2020 stock market crash

See also: Financial market impact of the COVID-19 pandemic

The 2020 stock market crash started on 20 February 2020. Because of COVID-19 lockdowns, global markets, banks, and businesses had big problems, like they hadn't seen since the Great Depression in 1929.

From 24 to 28 February, stock markets dropped more in one week than they did during the 2008 financial crisis. By early March, markets changed a lot, with big ups and downs. On 9 March, many markets around the world dropped sharply because of the COVID-19 pandemic. This day was called Black Monday I.

Three days later, on 12 March, there was another big drop called Black Thursday. Stocks in Europe and North America fell more than 9%. In the United States, it was the biggest one-day drop since Black Monday in 1987. Many markets around the world also fell a lot that day.

Impact by region or country

Africa

In April 2020, parts of Africa looked like they might enter their first recession in 25 years, and it could last longer. Experts thought Africa's economy might shrink by 2.1%–5.1% in 2020. African countries owed a lot of money to China from loans taken between 2000 and 2018; by May 2020, China was thinking about letting countries take more time to pay, and in June 2020, a leader in China said some interest-free loans to certain countries would be forgiven.

Botswana

Botswana was affected by big drops in the diamond trade, tourism, and other areas.

Egypt

Egypt's economy struggled because of the COVID-19 recession. Tourism, which employs many people and brings money to the country, almost stopped, and money sent home by workers living abroad also dropped. Cheaper fuel prices and less demand caused some shipping companies to avoid the Suez Canal, leading to less money for the government. Even so, Egypt was one of the few African countries to still grow during the recession.

Ethiopia

Ethiopia relies a lot on its national airline for exports, which stopped many of its flights. Exports of flowers and other farm products also dropped sharply.

Namibia

Namibia's economy was expected to shrink by 6.9%. This would be the biggest drop since the country gained independence in 1990. The tourism and hospitality industries lost a lot of money, and 125,000 jobs were affected. The diamond-mining sector was also expected to drop by 14.9% in 2020, while uranium mining might drop by 22%.

Zambia

Zambia faced serious money problems. Almost half of the country's budget went to paying interest, and there were worries about whether the country could keep making all its payments.

Americas

Argentina

Argentina entered its 9th financial trouble in history because of the recession. The government planned to take over one of the biggest companies that exports goods after it owed more than $1.35 billion.

Belize

The drop in travel was expected to cause Belize to fall into a deep recession in 2020. In 2020, the economy shrank by 13.4% with the biggest drops seen in travel and spending. The unemployment rate went up by 19.1% from September 2019 to September 2020.

Brazil

Brazil's government predicted its economy would have its biggest drop since 1900, with a loss of 4.7%. In the first part of 2020, the economy was 1.5% smaller than in early 2019, and it dropped to the same level as 2012. On April 9, 2020, at least 600,000 businesses closed, and 9 million people lost their jobs.

Even with the pandemic, one state in Brazil, São Paulo, was the only one to see its economy grow in 2020, by about 0.4%.

Canada

Total unemployment went up by 3 million and the number of hours worked dropped by 30% between February and April 2020. Sales in Canadian manufacturing dropped to the lowest level since mid-2016, especially in car manufacturing and parts.

In response, Canada's government introduced several benefits, including support for students, workers, and businesses.

By June 2020, the national unemployment rate in Canada was 12.5%, down from 13.7% in May.

Mexico

Mexico's economy was already weak before the COVID-19 pandemic, with a mild recession in 2019. The plans of the president depended on money from the state oil company, but the drop in oil prices made people doubt those plans. The country's economy also depends on tourism, trade with the United States, and money sent home by workers abroad, all of which were affected. This led to what could be Mexico's worst recession in a century, and the worst in Latin America after another country. However, Mexico's economy shrinking in 2020 was less than that of some other countries like Venezuela, Peru, Panama, Argentina, and Ecuador.

United States

The United States' recession began in February 2020 and ended roughly two months later, in April 2020, making it the shortest recession on record dating to 1854.

Before the pandemic, there were signs of recession. In mid-2019, a key economic sign showed a possible recession ahead.

Starting in March 2020, losing jobs happened very fast. About 16 million jobs were lost in the United States in the three weeks ending on April 4. Requests for help with unemployment reached a record high, with 3.3 million requests made in the week ending on March 21. The week ending March 28, requests set another record at 6.7 million and by May 13, new requests had topped 35 million. On May 8, reports showed an unemployment rate of 14.7%, the highest since 1941, with many people out of work or underemployed.

Restaurants saw sharp drops in customers across the country, and major airlines cut back their operations a lot. The Big Three car manufacturers all stopped production. In April, building new homes dropped by 30%, reaching the lowest level in five years.

About 5.4 million Americans lost their health insurance from February to May 2020 after losing their jobs.

The largest economic help package in American history, a $2 trillion package called the CARES Act, was signed into law on March 27, 2020.

Asia-Pacific

Australia

Before the recession, Australia was dealing with very expensive and severe bushfires which hurt the economy and trade routes. Australia had also been slowing down, with economists in late 2019 saying Australia was 'close to a recession'. Because of this and the recession, analysts in Australia expected a deep recession with at least 10.0% of working people losing their jobs and at least a 6.7% drop in GDP. In April 2020, a consultant predicted a shortage of rice and other basic foods during the pandemic unless farmers' water allocations were changed.

The unemployment level of 5.1% was predicted to rise to a 25-year high of 10.0%, according to data released in April 2020. An extra benefit for unemployment had been added to help people from April to September, then reduced, and then reduced again after December 31. The extra benefit stopped on March 31, 2021.

By April 2020, up to a million people had lost their jobs because of the recession. Over 280,000 people applied for unemployment help on the busiest day.

On July 23, 2020, a leader delivered a budget update stating the government had implemented a $289 billion economic support package. As a result, the 2020–21 budget will record a $184 billion deficit, the largest since World War II. Australia will keep their top credit rating. The total debt will increase to $677.1 billion by June 20, 2021. Also, real GDP was predicted to have dropped sharply by 7% in the June quarter with unemployment expected to reach 9.25% in the December quarter. However, because of more restrictions in Victoria, national unemployment was expected to reach 11%.

In August 2020, national unemployment reached 7.5%, falling to 5.6% by April 2021. In December 2020, it was announced Australia had come out of recession after seeing a 3.3% growth in GDP in the September quarter. A leader stated the effects of the recession had lasting impacts and recovery was far from over. Australia was set to avoid a big economic drop as once predicted earlier that year, though GDP was still likely to have dropped from 2019 figures.

Bangladesh

Bangladesh is one of the few countries that had positive growth during the pandemic. The Bangladeshi economy depends a lot on the garment industry and money sent home by workers living abroad. The garment industry was hit hard, having already been struggling in 2019. Money sent home was also expected to drop by 22 percent.

China

Because of the recession, China's economy shrank for the first time in almost 50 years. The national GDP for the first quarter of 2020 dropped 6.8% compared to the same time last year, and 10.0% compared to the previous quarter, and the GDP for Hubei Province dropped 39.2% in the same period.

In May 2020, a leader announced that, for the first time in history, the central government would not set an economic growth target for 2020, with the economy having shrunk by 6.8% compared to 2019 and China facing an "uncertain" time. However, the government also stated an intention to create 9 million new urban jobs by the end of 2020.

In October 2020, it was announced that China's third-quarter GDP had grown 4.9%, missing what experts expected (which was set at 5.2%). However, it shows that China's economy was steadily recovering from the shock that caused low growth for decades. To help the economy grow, the country set aside hundreds of billions of dollars for big building projects and used strong measures to control the virus and enforce lockdowns. It is the only major economy expected to grow in 2020, according to experts.

By December 2020, China's economic recovery was speeding up because of increasing demand for made goods. An expert group predicted that China's skillful handling of the pandemic would cause the Chinese economy to pass the United States and become the world's largest economy by nominal GDP in 2028, five years sooner than previously expected. China's economy grew by 2.3% in 2020.

In the first quarter of 2020, China's economy shrank by 6.8% because of the nationwide lockdown at the peak of the COVID-19 outbreak. With the help of strong measures to stop the virus and help for businesses, the economy has steadily recovered since the pandemic. China's economy grew by a record 18.3 percent in the first quarter of 2021 compared with the same time last year.

Korea

Korea's GDP growth rate in the second quarter of 2020 fell 3.3 percent from the previous quarter. This was the second quarter in a row of negative growth after the first quarter (−1.3 percent). It was the lowest performance in 22 years and three months since the first quarter of 1998 (−6.8 percent) after the 1997 Asian financial crisis. Experts said exports, which are 40 percent of the Korean economy, were the worst they had been in 57 years since 1963, as the main reason for negative growth.

The job market was also hit hard. According to officials, the number of people with jobs dropped by more than 350,000 in June compared to a year earlier because of the shock to the job market from the spread of COVID-19. The unemployment rate jumped to the highest since 1999 when they started keeping track. In particular, many young people struggling to find work, and the number of unemployed reached 1.66 million, up 120,000 from a year earlier.

Fiji

On March 18, officials reduced their main interest rate and predicted the country's economy to fall into a recession after decades of growth. Later on June 25, the national bank predicted the Fijian economy to shrink severely this year because of drops in spending and investment linked to ongoing job losses. Annual inflation stayed negative in May (−1.7%) and was predicted to rise to 1.0 percent by the end of the year.

India

Experts predicted India's growth rate for the financial year of 2020–21 to be 1.9%, but in the next financial year, they predicted it to be 7.4%. Experts also predicted that India and China were the only two major economies that would keep growing. However, this prediction later turned out to be wrong.

On June 24, 2020, experts changed India's growth rate to −4.5%, a historic low. However, experts said India's economy was expected to bounce back in 2021 with a strong six percent growth rate.

On August 31, 2020, officials released data showing the country's GDP had shrunk by 23.9 percent in the first quarter of the 2020–21 financial year. The economic drop followed severe lockdowns to stop the COVID-19 pandemic, where an estimated 140 million jobs were lost. According to experts, it was the worst drop ever recorded.

Indonesia

In late 2019, before the coronavirus pandemic became known, Indonesia's economy was already weak. The year 2019 ended with only a 1.1% increase in GDP in the last quarter. The early months of 2020 were when the coronavirus pandemic really started to affect countries around the world. Indonesia's economy was no exception, immediately showing signs of a recession in the first half of the year. The economy's GDP dropped by 0.6% in the first quarter of 2020 and hit a low of 6.9% shrinkage in the second quarter. While this drop was a big hit to the economy, compared to the huge drops other countries faced during COVID-19, Indonesia was still doing fairly well. In the third quarter, Indonesia's economy seemed to recover a little, with a 3.3% growth in real GDP. The last quarter of 2020 was not that impressive either, with the GDP growing by 2.2%. These small growths in Indonesia's economy were quite low, and it's clear that the economy stayed weak after the big hit of the global pandemic. Across the end of 2019 and the year 2020, the inflation rate that Indonesia's economy faced stayed quite low and steady. Noticeably, the Inflation rate during the last quarter of 2019 and the first half of 2020 had the biggest increase, consisting of around a 2.7% increase on the low end with a 3.1% at the high end. However, for the rest of the months that followed, inflation stayed around 1% and 1.7% for the rest of 2020; following the pattern of low and steady GDP that Indonesia experienced.

Iraq

Since 90% of the government's money comes from oil, it will be very hard hit by the drop in oil prices.

The job market has also been hit hard. As of January 2021, Iraq's unemployment rate was more than 10 percentage points higher than its level before COVID-19 of 12.7%.

Japan

In Japan, the GDP for the 4th quarter of 2019 dropped 7.1% from the previous quarter because of two main reasons. One is the government's increase in the consumption tax from 8% to 10% despite opposition from citizens. The other is the damaging effects of Typhoon Hagibis, the strongest typhoon in decades to hit mainland Japan. It was the costliest Pacific typhoon ever. Japanese exports to South Korea were also hurt by the Japan–South Korea trade dispute, lowering overall demand and GDP growth. This all added to the effect of the pandemic on people's lives and the economy, with the prime minister announcing a 'massive" help package worth 20% of GDP.

Lebanon

Since August 2019, Lebanon had been dealing with a major economic problem caused by an increase in the official exchange rate between the Lebanese pound and the United States dollar. This was made even worse by a large explosion in Beirut, which caused serious damage to the Port of Beirut, hurting Lebanese trade, and protests throughout the country.

New Zealand

In April 2020, New Zealand's government predicted the country could see an unemployment rate of 13.5 percent if the country stayed in lockdown for four weeks, with a range of 17.5 and 26 percent if the lockdown was extended. Before the lockdown, the unemployment rate was at 4.2%. A leader promised that the Government would keep the unemployment rate below 10%. In the second quarter of 2020, unemployment dropped 0.2 percentage points to 4 percent; however, the under-use rate (a measure of unused workers) rose to a record 12 percent, up 1.6 percentage points from the previous quarter, and working hours dropped by 10 percent.

The GDP of New Zealand dropped 1.6 percent in the first quarter of 2020. The country officially entered a recession after a GDP drop of 12.2% in the second quarter of 2020 which was reported by officials in September.

Philippines

The Philippines' real GDP dropped 0.2% in the first quarter of 2020, the first drop since the fourth quarter of 1998, a year after the 1997 Asian financial crisis. The economy slipped into technical recession after a 16.5% drop was recorded in the second quarter.

The government predicts that the GDP will drop by 5.5% in 2020. Another group predicts a year-on-year GDP drop of 8–9%. The drop is led by a decrease in spending by households which usually makes up 70% of the country's GDP and hesitation to spend because of COVID-19 quarantine measures.

In its annual economic performance report released on January 28, 2021, officials reported that the Philippines' GDP dropped by 9.5% in 2020, its worst drop since World War II. The last full-year drop was during the 1997 Asian financial crisis where the GDP grew by −0.5%. The 2020 drop was also worse than the 7% drop in 1984.

Singapore

Sales of property investments in Singapore dropped 37 percent to $3.02 billion in the first quarter of this year from the previous three months as the pandemic hurt investor confidence, a report from a company on April 13 showed.

On April 28, officials said in their latest half-yearly review Singapore will enter into a recession this year because of the effects of the COVID-19 pandemic, leading to job losses and lower wages, with "significant uncertainty" over how long and strong the downturn will be. Depending on how the pandemic develops and the success of policy responses around the world, Singapore's economic growth could even drop below the forecast range of minus four to minus one percent to record its worst-ever drop.

On April 29, officials said that total employment excluding foreign domestic workers dropped by 19,900 in the first three months of the year, mainly because of a big reduction in foreign employment. Among Singapore citizens, the unemployment rate went up from 3.3 percent to 3.5 percent, while the resident unemployment rate, which includes permanent residents, went up from 3.2 percent to 3.3 percent.

On May 14, Singapore Airlines posted its first annual net loss in 48 years – a net loss of S$732.4 million in the fourth quarter, changing from a net profit of S$202.6 million in the same quarter a year ago.

Europe

The European indicator of economic activity dropped to a record-low of 13.5 in April 2020. Normally, any figure below 50 is a sign of economic decline.

Armenia

The Armenian economy shrank sharply by 7.6%, removing all the gains from 2019.

Belarus

The Belarusian economy is being hurt by the loss of Russian oil subsidies, and the drop in price of Belarus's refined oil products.

Belgium

Belgium's economy showed low growth before the coronavirus outbreak in 2020. An already weakened economy, Belgium saw its economy drop during the first half of 2020 with a 2.8% decrease in the first quarter and an 11.4% drop in the second quarter, suggesting a recession. After a low point in the second quarter, the economy grew back and saw an 11.8% growth in its GDP in the third quarter. That growth was followed by a small drop of 0.4% in the fourth quarter of 2020 and a growth of about 2% in the first quarter of 2021. Despite the changes in Belgium's GDP in 2020, the job market stayed strong, avoiding a bigger drop as seen in other countries at the time. The unemployment rate in Belgium stayed relatively steady during the first quarter of 2020 compared to the previous quarter and it only went up by about a percentage point in April 2020 compared to the 5.2% unemployment in October 2019. The changes in Belgium's economy did not cause big changes to inflation rates which stayed rather low since the end of 2019 and through 2020.

Czechia

Czechia was doing very well before the end of 2019 and early 2020. During the fourth quarter of 2019, their GDP saw a small increase of 0.7% compared to the last quarter. Then like most countries, they hit a wall in the early quarters of 2020 with a 3.5% drop during the first quarter and a much bigger 8.7% drop in the second quarter. After that tough first half of the year, Czechia bounced back strongly with a big 7.4% increase in the third quarter. Finally, as the year ended, they increased slightly by 1% going into the 2021 year. Unlike the GDP percentage, the unemployment rate didn't change too much from their average. In the fourth quarter of 2019, Czechia had an unemployment rate of 2.1%. With events in 2020, Czechia managed to keep their unemployment rate even lower, with a percentage of 1.9%, in the first quarter. After that, in the second quarter, there was an increase of 0.5% in the unemployment rate making it a 2.4% unemployment rate in the country. Just like in the second quarter, we saw another increase of 0.4% during the third quarter with a total unemployment rate of 2.8%. Then to finish the year there was another small increase, to 3.0% of unemployed people in Czechia. Finally, looking at Czechia's CPI to see the inflation/deflation of the country during this time. In the last quarter of 2019, Czechia had a CPI of 107.3, going into the new year. Czechia started the year with a CPI of 108.13 which is an increase from the year before meaning Czechia was facing slight inflation. In the second quarter, Czechia saw big deflation with a total CPI of 103.9, showing how quickly prices can change. In the third quarter, prices went up, yet again, with their CPI totaling 105.3. To end the year they went back to deflating with a total CPI of 103.5, their lowest of the year.

Denmark

The Danish economy saw low GDP growth before the coronavirus outbreak in 2020. The Danish economy dropped in quarter 1 of 2020 as the GDP growth changed from 0.4% in quarter 4 of 2019 to −0.8% in quarter 1 of 2020 because of the deadly pandemic. After the drop in GDP in quarter 1 of 2020, another drop came in quarter 2 as it went from −0.8% to −5.9% which caused a deep recession. The recession period in 2020 didn't last long as the GDP growth jumped from −5.9% in quarter 2 to 6.0% in quarter 3. Even though Denmark's economy did manage to get out of the recession, the fast growth caused an increase in inflation. In quarter 4 of 2020, the economy dropped from 6.0% to 0.0% lowering inflation slightly. The GDP of Denmark did rise somewhat in quarter 1 of 2021 to 0.9%. Denmark saw low inflation from 2019 to 2021, reaching a point where the economy saw an inflation rate of 0% during the peak of the pandemic. This, in turn, caused deflation in the second quarter of 2020. Denmark saw a moderate to high unemployment rate. As of quarter 4 of 2019, it went from an unemployment rate of 5% to an unemployment rate of 6.4% in quarter 1 of 2021. The GDP, unemployment rate, and inflation rate shows the changing economy of Denmark during the start, middle and end of the pandemic.

France

France was hit hard by the pandemic, with two months of 'strict lockdown' put in place before mid-year. On April 8, 2020, officials declared that the French economy was in recession, shrinking by 6 percent in the first quarter of 2020.

At the end of the second part of 2020, several companies began cutting jobs: Nokia (1233 jobs), Renault (4600 jobs), Air France (7580 jobs), Airbus (5000 jobs), Derichebourg (700 jobs) TUI France (583 jobs) and NextRadio TV (330–380 jobs).

Italy

Italy's unemployment rate is expected to rise to 11.2%, with 51% worried about unemployment in March.

The early guess of Italy's GDP for the first quarter of 2020 showed a 4.7% drop compared to the same time last year, a much steeper fall than in any quarter either during the Great Recession or the European debt crisis.

Luxembourg

Luxembourg's economy showed low growth before the coronavirus outbreak in 2020. An already weakened economy, Luxembourg saw its economy drop during the first half of 2020 with a 1.2% decrease in the first quarter and a 6.2% drop in the second quarter, suggesting a recession. After a low point in the second quarter, the economy grew back and saw an 8.4% growth in its GDP in the third quarter. That growth was followed by a small drop of 0.5% in the fourth quarter of 2020. Despite the changes in Luxembourg's GDP in 2020, the job market stayed strong, avoiding a bigger drop as seen in other countries at the time. The unemployment rate in Luxembourg stayed relatively steady during the first quarter of 2020 compared to the previous quarter and increased only slightly by about 0.4 percentage points in April 2020 compared to the 5.6% unemployment in October 2019. After the drop in GDP in the first quarter of 2020, the unemployment rate reached its highest at 7.5% in the second quarter, then dropped to 6.8% in the third quarter and 6.3% at the end of the year.

The changes in Luxembourg's economy did not cause big changes to inflation rates which stayed rather low since the end of 2019 and through 2020.

Spain

The COVID-19 pandemic caused big problems for Spain's economy, leading to big drops in key areas. GDP dropped by −5.38% in Q1 2020 and −17.64% in Q2 2020, before partly recovering with +16.24% in Q3 2020 as rules eased. Growth slowed again to +0.24% in Q4 2020 and +0.40% in Q1 2021, showing a slow recovery. Exports saw big drops, falling −7.35% in Q1 2020 and −30.90% in Q2 2020, but recovered with +27.54% in Q3 2020, +4.89% in Q4 2020, and +0.73% in Q1 2021. Imports followed a similar pattern, falling by −4.35% in Q1 2020 and −28.23% in Q2 2020, followed by recoveries of +26.88% in Q3 2020, +5.99% in Q4 2020, and +2.60% in Q1 2021. Household spending was very changeable, dropping by −6.08% in Q1 2020 and −21.39% in Q2 2020, then jumping back with +21.37% in Q3 2020, only to increase slightly by +0.23% in Q4 2020 and drop again by −0.23% in Q1 2021. Investment in fixed capital dropped by −2.40% in Q1 2020 and −19.45% in Q2 2020, before recovering with +19.54% in Q3 2020, though it saw small drops in Q4 2020 (−0.17%) and Q1 2021 (−0.15%). Government spending stayed more steady, growing by +1.12% in Q1 2020, +0.95% in Q2 2020, +1.48% in Q3 2020, +1.78% in Q4 2020, and +0.66% in Q1 2021. These changes show the pandemic's deep and uneven effect on the economy, with big drops followed by partial recoveries and continuing changes. Unemployment was very high during these six quarters as Spain's internal economy struggled.

Switzerland

Switzerland's economy showed small growth in the last quarter of 2019, with a growth rate of 0.55%. However, the start of the COVID-19 pandemic caused a big drop of 1.4% in the first quarter of 2020, followed by a steep 6.6% drop in the second quarter, suggesting the start of a recession. The economy grew back in the third quarter of 2020 with a sharp 6.9% growth, but slowed down in the fourth quarter to just 0.4%. In the first quarter of 2021, the economy grew by 0.3%. Despite the changes in GDP, inflation stayed low during this time. Annual inflation in Switzerland was negative in every month from October 2019 to March 2021, with the lowest rate recorded in December 2020 at −0.81%. The inflation rate was slightly less negative in early 2020, with a small positive change of 0.2% in January 2020, before dropping further in the months after. Throughout this period, inflation stayed low, showing weak price changes despite the economic problems. Regarding unemployment, Switzerland saw a moderate rise in its unemployment rate during the pandemic. The unemployment rate stayed relatively steady through early 2020, but by the end of the year, it went up from 4.4% in February 2020 to 5.1% in December 2020, reflecting the economic problems from the crisis. The unemployment rate stayed around 5% through much of 2021 before slowly dropping to 4.4% by the end of 2021.

United Kingdom

On March 19, 2020, officials cut the interest rate to a historic low of 0.1%. They also added £200 billion to a support program, making a total of £645 billion since the start of the Great Recession. The next day, the Chancellor announced the government would spend £350 billion to help the economy. On March 24, non-essential businesses and travel were officially stopped in the UK to stop the spread of the virus. In April, the bank agreed to extend the government's loan amount from £370 million to an unknown amount for the first time since 2008. Household spending dropped 41.2% in April 2020 compared with April 2019. April's indicator of business activity scored 13.8 points, the lowest since records began in 1996, showing a serious drop in business.

By the start of May, 23% of the British workforce had been temporarily laid off. Government programs were started to help laid off employees and self-employed workers whose incomes had been hurt by the outbreak, effectively paying 80% of their regular incomes, depending on who was eligible. Experts estimated that the UK economy could drop 30% in the first half of 2020 and that unemployment was likely to rise to 9% in 2021. Economic growth was already weak before the COVID-19 pandemic, with 0% growth in the last quarter of 2019. On May 13, officials announced a 2% drop in GDP in the first quarter of 2020, including a then-record 5.8% monthly drop in March. The Chancellor warned it was very likely the UK was going through a serious recession.

A bank based in London reported $4.3 billion (~$5.12 billion in 2024) in profits during the first half of 2020; this was only one-third of the profits it had in the first half of the previous year.

On August 12, it was announced that the UK had entered a recession for the first time in 11 years.

During the pandemic, exports of many food and drink products from the UK dropped a lot, partly because the hospitality industry worldwide faced a big drop. According to news reports in February 2021, the Scotch whisky sector alone had lost £1.1 billion in sales.

Tourism in the UK (by visitors from both the UK and from other countries) dropped a lot because of travel limits and lockdowns. For much of 2020, and into 2021, vacation travel was not allowed and entry into the UK was very strictly limited. Business travel, for example, dropped by nearly 90% over previous years. This not only affected money from tourism but also led to many job losses.

Middle East

In the Middle East, the economic situation in the United Arab Emirates and Saudi Arabia got worse than any other country in the region. Because it depends a lot on tourism, Dubai was one of the first to reopen tourism. However, by January 2021, a big increase in Covid cases was seen in the UAE, while several countries across the world also began to blame the Emirati city for spreading the virus abroad.

On the other hand, the economy of the world's largest oil exporter, Saudi Arabia, faced a deep recession, because of the COVID-19 pandemic. In the second quarter, Saudi's economy shrank by 7 percent, hurting both the oil and non-oil sectors. Also, unemployment during the quarter also reached a record high of 15.4 percent. For the third quarter, the Kingdom didn't release its job market report to check the unemployment rate. In January 2021, it was reported that Saudi Arabia was supposed to release the data on citizen unemployment in December 2020. However, it was delayed four times, before the officials permanently removed the release date from the Saudi statistics authority's website.

Saudi Arabia

Saudi Arabia's economy was greatly challenged from 2019 to 2020, and the global COVID-19 pandemic made its effects worse on major economic signs. Unemployment in Saudi Arabia went up during this time. The unemployment rate in 2019 Q3 was around 12% for Saudi nationals, which went up to 15.4% in the second quarter of 2020. The pandemic, together with economic slowdowns especially in tourism, hospitality, and retail, caused job losses, especially among younger workers. In November 2019 Saudi Arabia inflation rate was −0.8%. Then in November 2020 the inflation rate increased to 5.7%. During the pandemic the inflation grew about 4.9%. The country shrank by not making and selling oil and products that people didn't want to use during the pandemic. Saudi Arabia GDP for 2020 was $734.27B, a 12.44% drop from 2019 which was $838.56B. GDP growth rate in 2019 Q4 was 0.9% and in 2020 Q4 the GDP grew to 1.5% which is an expansion to the economy GDP. Overall, the Saudi Arabian economy had a difficult year, with high unemployment, and big GDP drop during the global health crisis.

Impact by sector

Many service sectors were greatly affected by the COVID-19 recession.

The automotive industry saw new car sales drop, and major factories closed. The energy sector faced big drops in oil demand, with prices going below zero at one point. Tourism around the world shrank dramatically.

Restaurants faced big changes as cities closed them to in-person dining, allowing only pickup and delivery. Many workers lost their jobs. Retail stores cut hours or shut down completely, especially department stores and clothing shops.

Airlines and travel took a major hit due to restrictions and fewer people flying. Many planes flew empty, and several airlines closed down. The cruise ship industry also struggled greatly.

Food insecurity

Main article: Economic impact of the COVID-19 pandemic

See also: Impact of the COVID-19 pandemic on the food industry

The COVID-19 recession caused problems for many developing nations. In April 2020, the United Nations World Food Programme said that some parts of the world might not have enough food because of the pandemic. The 2020 Global Report on Food Crises showed that 55 countries were at risk. This was especially hard in countries already dealing with wars, like the Syrian civil war, and areas with insect problems in East Africa.

The United Nations predicted that many countries would have areas with poor food security in 2020. These included nations like Afghanistan, Angola, Burkina Faso, and many others across Africa, Asia, and Latin America. The report also raised concerns about places like Bangladesh, Colombia, and Lebanon, where large numbers of refugees could make food shortages worse. Oxfam warned that by 2021, many people might suffer from hunger linked to COVID-19.

National fiscal responses

Many countries made special programs to help their economies during the hard times from COVID-19 lockdowns. These programs, called stimulus programs, tried to help people and businesses.