The COVID-19 viral pandemic continues to be a highly personal, individual experience that is also an unprecedented globally shared phenomenon with wide-ranging repercussions. The pandemic has disrupted lives across all countries and communities and negatively affected global economic growth in 2020 beyond anything experienced in nearly a century. Estimates indicate the virus reduced global economic growth in 2020 to an annualized rate of -3.4% to - 7.6%, with a recovery of 4.2% to 5.6% projected for 2021. Global trade is estimated to have fallen by 5.3% in 2020 but is projected to grow by 8.0% in 2021. According to a consensus of forecasts, the economic downturn in 2020 was not as negative as initially estimated, due in part to the fiscal and monetary policies governments adopted in 2020. Generally, economic growth forecasts captured the decline and subsequent rebound in economic growth over the second and third quarters of 2020 but have been challenged since by the prolonged nature of the health crisis and its continuing impact on the global economy. As some developed economies start recovering, central banks and national governments are considering the impact of tapering off monetary and fiscal support as a result of concerns over potential inflationary pressures, weighed against the prospect of slowing the pace of the recovery. These concerns are compounded by the emergence of new disease variants and rolling pandemic hotspots. Major advanced economies, which comprise 60% of global economic activity, are projected to operate below their potential output level through at least 2024, which indicates lower national and individual economic welfare relative to pre-pandemic levels. Compared with the synchronized nature of the global economic slowdown in the first half of 2020, the global economy has shown signs of a two-track recovery that began in the third quarter of 2020 and has been marked by a nascent recovery in developed economies, but a slower pace of growth in developing economies. Developed economies have made strides in vaccinating growing shares of their populations, raising prospects of an economic recovery in 2021 and, in turn, the broader global economy. However, new variants of the COVID-19 virus and a surge in diagnosed cases in large developing economies and resistance to vaccinations among some populations in developed economies raise questions about the speed and strength of an economic recovery over the near term. A resurgence of infectious cases in Europe, Russia, the United States, Japan, Brazil, India, and across much of Africa has renewed calls for lockdowns and curfews and threatens to weaken or delay a potential sustained economic recovery into mid to late 2021. The economic fallout from the pandemic has affected certain industrial sectors of the economy and certain population groups disparately and could risk continued labor dislocations because of lingering high levels of unemployment not experienced since the Great Depression of the 1930s. In some cases, workers are reconsidering their career choices and work patterns, which may imply a post-pandemic economy marked by more varied labor arrangements and an altered urban environment. The human costs in terms of lives lost will permanently affect global economic growth in addition to the cost of elevated levels of poverty, lives upended, careers derailed, and increased social unrest. Some estimates indicate that 95 million people may have entered extreme poverty in 2020 with 80 million more undernourished compared to pre-pandemic levels. In addition, some estimates indicate that global trade could fall by an annual amount of 9.0% or slightly less in 2020 because of the global economic downturn, exacting an especially heavy economic toll on trade-dependent developing and emerging economies. The economic impact of the pandemic is expected to lessen in developed economies where vaccinations are facilitating a return to pre-pandemic levels of activity. In developing countries, however, outbreaks of new viral variants could prolong the pandemic and dampen prospects of a recovery.

Source:

Jackson, J.K., Weiss, A.M., Schwarzenberg, A.B., Nelson, M.R., Sutter, K.M. and Sutherland, M.D., 2020. Global

Economic Effects of COVID-19. Congressional Research Service.

1) Discuss the economic policies and theories which have been used by Iran. Your discussion should cover fiscal and monetary policies.