The Economic Environment: Global Factors Affected by COVID-19

This report analyzes the impact of COVID-19 on global economic factors such as unemployment and supply chain imbalance. It also reflects on the author's economic learning journey.

THE ECONOMIC
ENVIRONMENT
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TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................3
MAIN BODY...................................................................................................................................3
(a) economic factors affected globally due to covid-19 ............................................................3
l(b) reflection on my economic learning journey.......................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

·INTRODUCTION
The economic environment defined as all the economic factors that affect buying habit of
business and consumer therefore it affects the whole performance of company. This report will
cover global economic factors which get affected due to covid-19 pandemic. Further, this report
will analyse about reflection learning journey of economics.
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·MAIN BODY
·(a) economic factors affected globally due to covid-19
The pandemic has affected lives all across the global along with negative impact on
global economic growth (Yoosefi Lebni and et.al., 2021). Economic factors are influenced due
to pandemic situation but these two major factors of global economy will be discussed below.
Unemployment effect
Increase in unemployment rates became a clear indication of covid-19 impact on the
global economy. In addition to global economy, the recent covid-19 situation hit far deeper than
the crisis situation in 2009. The effects have been seen all across the world. February 2020, it
was starting point of current economic downfall after making the longest period of expansion.
This economic expansion followed by the great recession. In April 2020, US economy has faced
the highest rate of unemployment rate that is 14.8%. Since then, rate of unemployment fell to
5.8% in may 2021. Covid-19 pandemic has impacted on large demographic groups like
graduates, labour force, experienced etc. Graduates, experienced were on high peaks in
unemployment and labour workforce faced relatively decline in participation in organization.
This has also increased population below poverty line. Approx. 108 million worker are now
categorized as poor or extremely poor which means 5 years growth performance come to the
end. From the pictorial graph, it has analysed that unemployment rate is increasing continuously
from 5.66% to 6.47% in 2020.

Illustration 1: What is the economic environment in business?- Definition, Importance &
Factors. 2021
In addition to covid-19, it also impacted on economic sectors like hospitality, travelling,
education, leisure sector etc. All these sectors have lost large number of jobs since January 2020
and further more, service sector, education sector were on second position and third position
respectively (Vdovenko and et.al., 2018). Further, shutting down of manufacturing plants also
created an impact on cutdown jobs and keep raising unemployment. Company was not in
position to pay salary to its workforce as commercial activity stopped. Due to economic
uncertainty, business started to fold or apply for bankruptcy. It knocks- on effects like less
consumer spending, increase unemployment, Reduced in working hours, increasing sickness of
business, isolation has hit labour supply.
Now gradually lock down has been removed but still it takes time to come up on same
pitch as before. Organizations are reviewing all its activities like employment changes,
recruitment, selection process, talent management etc. Business are trying to recover their
operational activity but still there is a big gap between what has planned for future and what
actually are. Unemployment has changed habit of disposable income of family, diminishes
employee morale towards job, reduces economic output (Hashem, González-Bulnes and

Rodriguez-Morales, 2020). Employment growth is still insufficient to make up for the losses
suffered. Recovery of covid-19 is not just a health issue but serious damages to economies and
societies need to overcome too.
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Imbalance of supply chain
Imbalance of supply chain has created temporary manufacturing desert in global
economy which impacted on decrease in output. Only 2% companies were prepared to face this
pandemic. Many countries had imposed lock down to stop the spread of covid-19 pandemic by
restricting travelling and commercial activities. Global economy has analysed the supply chain
effects in the set of lock down. Imbalance of supply chain started from china in February and
demand crises followed as the global economy shutdown. It was found that loss in supply chain
which is related to initial lock downs that is majorly depended on the restriction of economic
activity. Factors like Increase demand, labour shortage, global logistics constrain etc. increased
the supply chain risk. Company has faced manufacturing hurdles and imbalance in supply chain
(Rume and Islam, 2020). This resultant in shortage of grocery product, medicine, luxury item
etc. it has changed business environment of many organizations at a global level. Global
economic output has dropped drastically automotive sector dropped by 19%, electronics sector
17%, textiles 14%.
Board global developments have pushed to rethink their supply chain about its stability
and reliability for the future uncertain events. This is not only related to covid-19 pandemic but
also related to government action all across the world. It has started impacting supply chain
through trade war, issue of sustainability etc. From the covid-19 situation, it has cleared that
organization has faced operational break down which includes reduced supply, hurdles in
achieving their own contractual obligations with customer, row material shortage, cost increased,
affecting manufacturing plant etc.
Some companies have already adopted changes after analysing and prioritizing supply
chain. The key factors which are governing manufacturing sectors to recover or ability of
companies to re-mobilize complex multi-country supply chains. Thus, this recovery turn into
supply chain mapping and risk management. Covid-19 has created urgency behind automation
and also use of robotics to compensate against the disruptive supply chain through restriction

imposed on the movement of people. Now all the economic activity are resuming back. Industry
has started their plants for manufacturing and along with labours are coming back to their work
(Sovacool, Del Rio and Griffiths, 2020). All the countries are trying to make its own
manufacturing hub. Organization are coming up with diversified supply chain which increase the
product supply all over the world.
Due to covid-19 companies has suffered huge losses in terms of cost invested in
diversified supply chain, technological changes in supply chain etc. those companies who were
not following digital platform, had to suffer from loss of customer due to lack of efficient supply
chain. Whole business is depended on its supply chain, if it gets affected then all the other
activity has no value. Those businesses who had a high dependency on china to full-fill the
requirement of raw material, finished goods has faced drastic changes like shut down of
business, lack raw material etc. due to imbalance supply chain.
l壱(b) reflection on my economic learning journey
Being a student of economics this was very interesting and knowledgable journey.
During this journey I came across lots of economic factors which get affected due to covid-19
pandemic. This situation was the perfect example of how one factor can affect the whole
economy and also how economy fall into recessionary situation. In addition to, I have also
analysed some economic factors like unemployment, financial market, GDP, supply chain etc.
and understood how these economic factors got changed drastically due to covid-19. Being a
economics student it was helpful to know, how unemployment takes whole economy downward
(Susilawati, Falefi and Purwoko, 2020). Major reason behind the unemployment is shut down of
business operation activities. I have already studied this factor in my academic course but this
time I got chance to analyse the relationship between unemployment and operation activities
practical sense. This situation was perfect example of unemployment where person is not getting
job according to their own skills and requirements. To improve economic condition, government
took necessary actions like easily loan facility, opening of job vacancies, provide schemes to
speed up manufacturing process etc.
I improved my decision-making skills by proper evaluating government steps. Further, I
have analysed imbalance in supply chain, this lead to increase in raw material cost, increase in
inflation etc. Being a student of economics I have increased my imagination skills by looking for
another step can be taken to reduce the impact of covid-19 except lock down. This opportunity

has provided me platform to analyse business actions to balance supply chain. Some actions
were taken like adopting technological transformation, diversification in distribution, taking
business to digital platform etc. This was my informative and practical implementation journey
of knowledge (He and Harris, 2020).
Further, I went ahead with preparation of this report and Thus, I have applied decision-
making skill, analytical skill, summarization skill, interpretation skill to present reliable
information. I have implemented my decision-making skill by way of selecting right kind of
data. This report also helped me to grow my decision-making skill into my work by finding
informations from reliable sources, selecting the best quality of content. In addition to, my
analytical and summarization skills also helped me to provide useful information in a systematic
format. I got opportunity to apply my analytical and interpersonal skills while analysing data in
different form. I have also studied how government is taking action to recover the economy
because I am not good at decision-making skill like what all action are required to take to
recover whole economy. Interpretation skill helped my while applying filter for preparation of
this report (Liu and et.al., 2020). By applying filter, I have sorted all the required informations
which helps in allocating all the content.
·CONCLUSION
This report has studied how one factor affected the whole economy. Economic
environment is based on economic factors like inflation, income, employment rate, supply chain
etc. this report studied in detail about economic factors like unemployment, imbalance in supply
chain affected due to covid-19. Further, this report also analysed reflection on economic learning
journey. Here, decision-making, interpersonal skill, analytical skill also applied while preparing
this report.

l壱REFERENCES
Books and Journals
Hashem, N. M., González-Bulnes, A. and Rodriguez-Morales, A.J., 2020. Animal welfare and
livestock supply chain sustainability under the COVID-19 outbreak: An overview.
Frontiers in Veterinary Science. 7. p.679.
He, H. and Harris, L., 2020. The impact of Covid-19 pandemic on corporate social
responsibility and marketing philosophy. Journal of business research. 116, pp.176-182.
Liu, Z. and et.al., 2020. Near-real-time monitoring of global CO 2 emissions reveals the effects
of the COVID-19 pandemic. Nature communications. 11(1). pp.1-12.
Rume, T. and Islam, S.D.U., 2020. Environmental effects of COVID-19 pandemic and potential
strategies of sustainability. Heliyon, p.e04965.
Sovacool, B. K., Del Rio, D.F. and Griffiths, S., 2020. Contextualizing the Covid-19 pandemic
for a carbon-constrained world: Insights for sustainability transitions, energy justice, and
research methodology. Energy Research & Social Science. 68. p.101701.
Susilawati, S., Falefi, R. and Purwoko, A., 2020. Impact of COVID-19’s Pandemic on the
Economy of Indonesia. Budapest International Research and Critics Institute (BIRCI-
Journal): Humanities and Social Sciences. 3(2). pp.1147-1156.
Vdovenko, N. and et.al., 2018. Management mechanism of agrarian economic system:
composition, functions and factors of development in Ukraine. Problems and Perspectives
in Management. 16(2). pp.179-189.
Yoosefi Lebni, J. and et.al., 2021. How the COVID-19 pandemic effected economic, social,
political, and cultural factors: A lesson from Iran. International Journal of Social
Psychiatry. 67(3). pp.298-300.

Online
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