Andrew Farrow on the Effect of the Coronavirus on Global Economic Sentiment
The outlook for the global economy has been altered by the recent events of COVID-19. While economic sentiment was extremely negative at the onset of the pandemic, it has improved over time. However, with a recent upswing in infections, as a second wave takes place, many are wondering what they can expect from the global economy, as well as within their country, in the months to come.
As an academic with a focus on international business, Andrew Farrow is familiar with changes in global economic sentiment. Raised in Kitchener, Ontario, Andrew attended the University of Guelph until, in 1996, he transferred to the University of Winnipeg to study Criminology and Conflict Studies. After years of working in Security and Law Enforcement, Farrow began working on his graduate degree in Conflict Management at Royal Roads University. Continuing his education, Andrew then earned an MA in War Studies from Royal Military College, an MBA from Vancouver Island University, and an MSc in International Business from the University of Hertfordshire. Currently retired, Andrew continues to be interested in education and business and plans to begin working on a Ph.D. studying the relationships between peace and conflict and the influence of economic forces. He discusses how the Coronavirus has impacted global economic sentiment.
At the onset of the pandemic, economic sentiment was overwhelmingly negative. With job security wavering and financial pressures felt by many, markets around the world saw a significant decline. In addition, pandemic-related restrictions affected manufacturing, international shipping, and sales. As events unfolded, business leaders across the globe quickly took a negative stance, expecting the market to continue to contract, company profits to decline, and for the global economy to see a significant downturn. In fact, according to a survey conducted by McKinsey & Company in April 2020, 61% of respondents expected company profits to decrease. This figure presented a grave reality, with negative sentiment more prominent than at any other point since the financial crisis in 2008. As Andrew Farrow notes, based on this negative global economic sentiment, a recession or depression was anticipated in the wake of COVID-19.
Andrew Farrow on the Current Outlook
The improving state of the economy over the past few months has resulted in a slightly more positive economic outlook. The attitudes of leaders and business owners are now more optimistic, with 57% expecting an improvement in their national economy in the next six months, according to McKinsey & Company. This includes a positive outlook on profitability and demand.
In terms of the global economy, the outlook is also improving, compared to opinions early on in the pandemic. It is believed that the world economy will see a slow recovery, as the virus continues to reappear. According to the McKinsey Global Survey, this outlook has changed from September, when participants still believed the virus would be contained and that economic recovery would begin, although occurring over the long term. While not all leaders foresee an improvement in the global economy in the coming months, many do believe that it will remain consistent, rather than declining significantly. Andrew Farrow notes that global economic sentiment has likely become more negative recently due to the upsurge in cases in many areas as a second wave of the virus takes hold.