Post COVID-19 Pandemic Developments and the Challenges of the New Economic Crisis: Revisiting and Responding through Financial Innovation

Introduction:

The next phase in the development of the global economy, after the impact of the COVID-19 pandemic, has come under the shadow of a new challenge: the intensification of the sanctions war between Western and Eastern countries. This conflict, which began between 2008 and 2014 and resumed with renewed vigor in 2022, has had an inherent impact on the global financial community. In this text, we offer a closer look at the effects of the economic crisis, the impact of sanctions and customs barriers, and provide possible strategies for overcoming the challenges using financial innovation.

The economic crisis and its aftermath:

Following the unrest caused by the global pandemic, the escalating sanctions standoff between the world's leading powers has become a new challenge for the entire global economy. According to the World Bank, economic growth is expected to decline by 5% in 2024, the highest point in decades. This indicates a global economic downturn caused by the impact of two powerful crises in a short period of time.

Impact of reciprocal sanctions:

Examining the impact of economic sanctions through the lens of World Trade Organization data reveals that global trade is declining by more than 10%. This not only results in loss of corporate profits, but also reduces the level of investment, which ultimately hinders economic development. Long-term forecasts from international economic agencies foreshadow an additional slowdown in growth on the horizon of the next five years.

The role of customs barriers:

A study of the impact of customs barriers by the Economic Forum reveals that countries that have introduced protectionist measures face a sharp decline in exports and hence a deterioration in their trade balance position. In the US, for example, the inflation rate rose by 2.5% following the introduction of new tariffs on imported goods. Such measures could lead to additional hardship for industrial sectors and higher unemployment.

Rising unemployment and employment outlook:

An analysis of unemployment rates by the International Labor Organization indicates that each percentage point of economic deterioration leads to a 0.8% increase in unemployment. This underscores the seriousness of the challenges facing the global labor market. In light of this, the need for new employment strategies and labor market support becomes more urgent.

Scam projects trap and financial risks:

The growth dynamics of financial fraud schemes are reflected in statistics reported by the Securities and Exchange Commission. In 2023, there was a 15% increase in investment fraud cases involving financial promises of high returns. It is important to emphasize that the individuals used in fraudulent schemes are victims of the process itself and have nothing to do with the schemes offered.

Advertisements promising easy earnings using the names of famous personalities become a trap for the gullible. For example, you constantly see ads on social networks and YouTube where Ilon Musk or Zuckerberg talk about "super bot projects" promising earnings. However, it's worth noting that all of these claims are fraudulent endeavors, not real offers. Beware and verify the information before investing your money.

Financial innovation as a way to solve problems:

With the economic crisis, there is an increasing interest in financial innovation. According to a McKinsey study, companies that actively innovate in the financial sector have demonstrated more sustainable growth, lower risk and greater adaptability to changing market conditions.

Example Investment:

Let's look at a practical example of crisis investing. Let's assume that an investor has invested €1,000 in a trading account and his monthly return is 15%. Taking into account the reinvestment of the profit, after one year the investor's capital will grow to €5,350 and after two years to €28,625. This capital growth is much higher than bank deposits and savings and loan societies over the same period.

Example: what is offered by one of the best savings societies in Estonia. 😂

 
Development prospects:

Innovative financial management methods open new horizons for overcoming the economic crisis. Investments are becoming a necessity, and the use of advanced technologies in the financial sphere is the key to stable capital growth. For example, investing in forex using robots or signals allows you to achieve significant profits in a short period of time.

Education and training in finance:

The realization of the importance of financial literacy among the public is being expressed through the actions of governments and the business community. New education and training programs offered through financial innovation are aimed at improving financial literacy and reducing risk for investors.

Conclusion:

In this article, we have taken a detailed look at the challenges facing the global economy and proposed solutions through the use of financial innovation. Responsible investing, education and adoption of advanced technologies become the foundation for successfully overcoming challenges and achieving sustainable economic growth. We wish all readers successful financial decisions and the pursuit of financial independence.

Igor Kalinin, author of trading strategies and algorithms at Kalinka Capital OU.

May your investments be profitable!