- KredX Editorial Team
- 13 May 20
- business,Cashflow management,COVID19

During early 2020, when markets were looking for recovery signs from the trade wars, decreasing consumer demand, and slumping commodity prices, the world woke up to a pandemic outbreak that challenged the global status quo. Fast forward to May 2020; the COVID-19 outbreak has compelled the world to embrace social distancing, putting the global economy at a halt. In short, social distancing translated into economic distancing, putting a dent in the global gross domestic output for the upcoming quarters.
The pandemic induced financial slowdown is spreading like wildfire, withering the probabilities of an economic recovery in the near term. Amidst such a situation, when the world is undergoing a tectonic shift in trade culture, the economic downturn has resurrected memories of the 2008-09 global financial crisis. Although the repercussions may appear to be similar, there are some key differences between the 2008 recession and the 2020 pandemic recession that emerged suddenly - essentially their origins - the Great Recession of 2008 was a systemic crash caused by bad debt, whereas the Pandemic-triggered recession of 2020 is a cyclical crisis prompted due to the sudden stoppage of economic activities.
According to the International Monetary Fund (IMF), the consequential outcome of the pandemic-infected global economy is going to be the worst recession since the Great Depression. What makes the situation grim is that, when compared to the 2009 financial meltdown during which trade dropped 12.5%, the contagion-infected market would witness a steep plunge between 13-32% in 2020, before rebounding in 2021.
The magnitude of the economic downturn seems to become evident as the sentiment of the global market remains low, unveiling a reduction of trade, withdrawal of investment, shrinking consumer demand and rising unemployment rate across the globe. As per IHS Markit, the COVID-19 recession will be more extensive when compared to the global financial crisis in 2008-09, with the world GDP plunging 2.8% in 2020 compared with a drop of 1.7% in 2009.
Also Read: Decoding Past Pandemics & Their Economic Impacts