- Global government debt rose by 12 percentage points since 2020.
- Inflation surged due to post-lockdown spending and supply chain disruptions.
- Labour markets shifted, with hospitality and logistics growing post-pandemic.
- Travel patterns changed, with remote work reducing public transit use.
The World Health Organization declared COVID-19 a pandemic in March 2020. Five years later, its economic aftershocks remain. Governments borrowed heavily to sustain welfare and livelihoods. Inflation, rising interest rates, and shifts in labour markets continue to shape the global economy.
The pandemic also transformed consumer habits. Remote work, digital transactions, and new travel preferences have persisted. While the immediate crisis has passed, its effects are still visible across industries and financial markets.
Debt, Inflation, and Interest Rates
Governments worldwide took on massive debt to support their economies. Since 2020, global government debt has increased by 12 percentage points. Emerging markets saw steeper rises, placing further strain on their financial stability.
Inflation soared in the years following the pandemic. Post-lockdown consumer demand, supply chain disruptions, and government stimulus packages contributed to price surges. By 2022, many countries faced peak inflation levels, prompting central banks to intervene.
To curb inflation, central banks raised interest rates. However, the severity of these measures varied. Sovereign credit ratings declined due to economic shutdowns and rising debt levels. Data from Fitch Ratings shows that the global average sovereign credit score remains lower than pre-pandemic levels. Less wealthy emerging markets saw their ratings drop even further, making borrowing more expensive.
Labour Market and Travel Industry Shifts
The pandemic disrupted job markets worldwide. Millions lost their jobs, with women and low-income workers hit the hardest. As economies reopened, the employment landscape shifted. Sectors such as logistics and hospitality grew, fueled by the rise of e-commerce and food delivery services.
Labour force participation rebounded, surpassing 2019 levels in some regions. However, economic inequality widened. The wealthiest 1% now earn a larger share of national income than before COVID-19.
Gender disparities in employment also grew during the crisis. Women left the workforce in large numbers due to layoffs in hospitality, food services, and manufacturing. Caregiving responsibilities further impacted female workforce participation. However, data suggests a gradual recovery in gender employment gaps.
Changes in travel and commuting patterns have also persisted. While leisure and business travel have rebounded, public transit use remains lower than in 2019. Major cities like London have seen a decline of about a million daily public transport journeys. In the US, work-from-home trends continue to reduce commuting rates.
The airline industry suffered record losses during the pandemic. According to IATA, the sector recorded a $175 billion deficit in 2020.
However, by 2025, the industry is expected to generate a net profit of $36.6 billion, with a projected 5.2 billion passengers. Despite the recovery, hotel prices remain significantly higher than in 2019. In regions like Oceania and North America, room rates have outpaced inflation.
Digital Transformation and Consumer Trends
The pandemic accelerated the shift toward digital payments and online shopping. Lockdowns forced consumers to rely on e-commerce. Though online sales growth has slowed since its pandemic peak, it remains a dominant trend.
In Europe, online purchases increased alongside the expansion of physical retail spaces. Market research firm Euromonitor projects a 2.7% increase in retail space by 2028. Digital and delivery companies experienced massive gains in 2020, but not all have sustained their success.
The cryptocurrency market also saw a boom. Despite market crashes and the collapse of major exchanges like FTX, Bitcoin has surged by 1,233% since December 2019. Many investors turned to cryptocurrencies as an alternative to volatile stock markets.
Investment in retail trading platforms also increased during the pandemic. In December 2020, retail investors accounted for 27% of total U.S. equity trading. Platforms like Robinhood gained popularity as meme stocks surged.
The Lasting Economic Shifts of COVID-19
Five years later, COVID-19’s economic effects still linger. Inflation has settled, but debt remains a concern. Economic inequality hasn’t faded, and labor markets have adjusted. However, travel habits and workplace norms have changed for good, creating a new way of working and living.
The digital economy keeps expanding, reshaping global markets and consumer habits. Businesses and governments continue to adapt, pushing the post-pandemic economy toward a new reality. Changes once seen as temporary have become permanent, defining how industries and individuals navigate the modern financial landscape.