An economist's view: Three years with Covid

It has recently been three years since the first death of covid. The economic effects of the pandemic, as well as the health ones, will be felt for many years to come. This is particularly evident in the labor market, real estate and healthcare. In the USA, about 1,6 million people resigned from their jobs, in Poland it is the other way round and our economic activity rate is growing after the pandemic.

3rd anniversary since first COVID victim

Last week marked the third anniversary of the virus's first death SARS-COV-2. Since then, most of the world has recovered from the pandemic, although cases are still common. About 70 percent of the world's population have been vaccinated (in Poland it is 64%), and a larger percentage has acquired natural immunity to infections. In the US and Europe, covid disappeared from the list of the most important problems of consumers and investors, replaced by soaring inflation. However, it should be remembered that the economic effects of the pandemic will probably be felt for many years (as will the health effects). The virus itself has not gone away and continues to cause new infections. China is the last large country to liberalize its pandemic rules and at the same time record a large number of cases. However, around the world, we continue to see the effects of the pandemic on jobs, real estate and healthcare – to name just three.

China, in response to the slowdown in economic growth, abandoned its "zero covid" policy faster and more abruptly than previously expected. Ultimately, this is a strong support for both the local and global economy. We can see the implications of this decision from the raw materials market to the luxury goods market. It is also important for Poland, because we have a very large and constantly growing deficit in foreign trade with China. The economy of Germany is even more closely related to China, which is also important from our point of view. These trends are further reinforced by the increase in government support in China for the critical real estate sector and the easing of regulatory sanctions in the technology sector.

The shock of the COVID-19 pandemic caused the biggest and shortest global recession in history. The reaction to it was a very large increase in government spending. This shortened the recession, but at the cost of rising global debt levels to unprecedented levels. The epidemic also contributed to higher inflation and interest rates, and a longer perspective of the former returning to the level of 2-3 percent. In many countries, the response to covid was a decrease in the professional activity rate, in the USA this indicator fell by 1 pp, which means that 1,6 million. people quit their jobs. In Poland, we are dealing with the opposite trend, as this ratio has increased by 2 pp since the outbreak of the pandemic

The home office stayed with us

Another trend caused by the pandemic is the increase in the popularity of working from home. In this respect, the number of people performing remote or hybrid work has significantly increased in Poland, and new legal regulations regarding this mode have also appeared. We have clearly observed this trend on the capital market, where companies related to WFH (work-from-home) recorded very high increases. Then, as the pandemic subsided, the valuations of these companies were revised. Looking globally, the biotechnology industry has also developed very much, due to large expenditures on the development and production of vaccines. In the coming years, many new vaccines will come onto the market for many new diseases that otherwise would not have been able to emerge so quickly.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.