New Global Financial Order

(Dr.Syed Mehboob, Karachi)

COVID 19 has immense effects on social,political and financial order of the world. Post COVID 19 world would not be the same as it was pre COVID 19. So far 2.726 million people across the world has been affected, while 191,086 deaths about 7 perecent of total cases has been reported as on 24th April, 2020. About 750,092 people have recovered from this disease which is 27.16% of the total cases. America is the most affected country with 886,709 cases a 32.52 % of global cases, with 50,243 death a 26.30 % of total deaths and a 5.66 % of total cases reported in USA. USA , Spain, Italy, France and Germany are top six cluntries among the worst affected one. These six countries have 1.74 million corona patients a 63 % of total global cases. All the global political super powers like USA, China, Russia, France, UK, Germany , Italy , spain have been badly affected.
Corona has changed the world, the countries with highest defence budget have failed to control corona. In USA recery is only 10 % of total cases which is alarming. American oil market has been creshed and future transaction are done at -39 %. Three American lines , Delta Airlines, Unite Air Lines, and American Air Lines are facing severe economic crisis. This Corona virus has brought gigantic changes in international financial markets. A few months before investment in US dollars was considered secure one. Now the monopoly of US dollar has been challenged by Chinese currency Yuan. IMF has recently included Chinese Yuan in its foreign exchange basket. US dollar is a fiat currency which is not supported by any precious metal. Investing in US dollar is becoming more risky. US dollar is controlled by Federal Reserve System in USA. Since the suspension in 1971 of convertibility of paper US currency into precious metal , the US dollar is de facto fiat money. In January, 2020 there were about 1,700 billion US dollar in circulation , of which $ 1.65 trillion were in the Federal Reserve notes and the remaining $ 50 billion in the US notes and coin.

The financial dominance and monopoly of USA is fastly diminishing. Total US debt has risen to 24.61 trillion dollars ( 24,610 billion dollars). Debt per citizen is US$ 74,848, debt per tax payer is US$ 198,125 while federal budget deficit is $ 2,394 billion.There are 132.119 million work force out of which 35.673 million are unemployed, which is 27 % of the total workforce. America is paying $ 3, 739 billion per year. Recently due to corona virus lock down and crisis more than 4 million filled USA unemployment beneficiaries.

The COVID 19 crisis is having devastating effects on workers and employees across the world. There are massive losses, both of output and jobs across all the sectors. The world is facing worst global crisis since the world war II. The economic impact of the pandemic is likely to be severe and sustained. Both the supply and demand sides of the labour market are in a major crisis. Especially hard hit was the travel and tourism sector which contributes 3.2 percent of the global gross domestic product in 2018 , with related secondary Industries taking the figure upto 10.4 percent. Tourism and travel sector which accounted for 319 million jobs worldwide in 2018 or 10 percent of the global employment could contract about 45 and 70 percent. The EU tourism industry alone is estimated to be losing around a billion euros or US$ 1.1 billion in revenue per month. Out of 2.6 million direct workforce 70 % are unsure when they might return to their jobs. World Bank has predicted 23 % decline in Pakistan's remittances, which might be US$ 17 billion in 2020 as compared to US$ 22.5 billion in 2019.

Yuan is now a global currency and in future it would be used in international trade as dollar is being used today. Next five years are very important in which global financial position is likely to be changed drastically. A new global financial order is being emerged where American and Western hegemony is being challenged and Asia particularly China is being emerged a new global financial and trade superpower. Total global debt is US$ 58.586 trillion out of which US has 42% of the global debt the largest world debt share. US owes about $ 1.01 trillion dollars to pay back to China. Every minute adds about US$ 10 million in American debt which shows the vulnerable position of USA amid COVID 19 which is a major blow to US economy . In a nut shell it can be predicted that with a decade American monopoly would be wiped out and new powers will take over financial supremacy from USA.

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