Throughout the history of humanity, a series of unfortunate events related to economic crises have occurred, whether due to natural disasters, pandemics, wars, or decisions of important world leaders. There are many causes for which a crisis could arise, and it is no surprise that in recent times COVID-19 has been added to the list — and, being pessimistic, perhaps it will not be the last.
Some critical moments in global economic history:
In 1914, on the eve of the First World War, financial panic broke out as many investors feared the imminent conflict. This caused many to withdraw their stocks and bonds, triggering a 6.7% contraction. Many stock exchanges closed operations for over five months, and more than 50 countries experienced some form of asset depletion.
Between 1930 and 1940, also known as the 1929 Crisis or "Black Thursday," the collapse of the New York Stock Exchange triggered a domino effect across American markets. Numerous banks failed and unemployment rose sharply, quickly spreading to other countries.
In 1973, the oil crisis erupted when the Arab bloc of OPEC decided to impose a petroleum embargo on Western nations as retaliation for supporting Israel in the Yom Kippur War. This caused oil prices to spike and inflation to surge sharply.
The debt crisis of the 1980s began when many Latin American countries, especially Brazil, Argentina, and Mexico, borrowed large sums from international creditors to fund industrialization plans. Rising annual interest rates caused many Latin American countries to quadruple their debt, compromising their GDP to commercial banks.
The 1994–95 Tequila Crisis is well known in Mexico. The country had recently entered the global economy amid fearful uncertainty among investors, who withdrew capital from the country, rapidly triggering a severe currency devaluation.
This list could continue all the way to the second-to-last crisis in 2008, with the collapse of the real estate bubble across Europe.
It is true that the situation we found ourselves in during 2020 could be considered the most destabilizing of all we have experienced. The combination of a pandemic that caused thousands of deaths worldwide, the confinement of millions of people in their homes without the social interaction they were accustomed to — generating hysteria, uncertainty, stress, emotional imbalance, and other psycho-emotional disturbances — along with the intermittent operation of companies worldwide, causing layoffs and affecting the economy of many families and small businesses.
It has also prompted many people to turn to social media as a digital source of income to compensate for job loss. For many entrepreneurs, it has been an opportunity to adapt their businesses to current needs, while for many companies it has been the beginning of changes in the way they operate and sell.
It is incredible to see that 5 out of 10 companies in Mexico are doubling their online growth, according to the 4.0 Report on the Impact of COVID-19 on Online Sales by the Mexican Online Sales Association (AMVO).
Now let's analyze what experts have evaluated for Mexico. It is estimated that by the end of 2020 GDP will have fallen 9.0%, and for 2021, once contagion levels decrease, a growth of 3.5% is expected by year-end — provided the number of infections does not continue to rise.
Our outlook depends heavily on certain events such as: vaccine rollout, countries maintaining their fiscal programs, moderation of trade tensions with China, the T-MEC flowing bilaterally to benefit involved countries, and more.
Not everything is gray, but we cannot say it is rosy either. From this crisis we can take away that a new way of life has emerged — a new way of doing commerce (which was already signaling that it was the future of trade in our tech boom era), where social media and telework (home office) will be a turning point in lifting this economy worn down by COVID-19.