Economic growth is achieved essentially through cycles. The Covid-19 epidemic had, and to this day, reflections on the economy. As Guitton said “a cycle is made up of a set of years separated by maximums and minimums”. We can define the economic cycle as a repetitive phenomenon, characterized by a succession of phases of increases then of the low of production.
Covid-19 is a pandemic of an emerging infectious disease, caused by the coronavirus, it appears on November 17, 2019 in Wuhan city in central China.
So what is the notion of the business cycle, and what is the impact of covid-19 on it?
I will first deal with the concept of the economic cycle and the types of cycles.
Secondly, I will deal with the impact of Covid-16 on the economic cycle.
An economic cycle is a hypothetical period, of a fixed duration, which corresponds more or less exactly to the return of the same economic phenomenon.
A cycle has phase boxes:
• Expansion: The expansion phase refers to the phase of the economic cycle characterized by the increase in the volume of production and demand over a short or medium period.
• The crisis: the term crisis designates the brief moment of economic downturn. It is represented by the turning point, which marks the start of the downturn in economic activity.
• Recession: this is the downward phase of the cycle, which is characterized by a slowdown in economic activity. If this slowdown is significant, we speak of depression.
• The recovery: The recovery refers to the phase of the economic cycle which is characterized by a return of the economy to a phase of expansion after a phase of recession. The recovery therefore represents the turning point which marks the return of a phase of growth in sustained economic activity.
The main theories are:
• Long cycles (or Kondratieff): (from the name of the economist who “discovered” them) which extend over a period of about half a century. It is innovation that is at the origin of this type of cycle. The upward phase is generated by the diffusion of innovation in the economic sphere, the downward phase reflects the end of the impact of these innovations on the structure of the economy.
• Classic cycles or short cycles also called Juglar cycles: which last on average between 6 and 10 years. They are essentially motivated by cyclical causes which influence the short-term behavior of economic agents (Investment, consumption …).
• Kitchin cycles: which lasts approximately 40 months and which are linked to company policy in terms of changes in stocks of finished products (Example: when they anticipate a resumption of activity, companies preventively increase their production to replenish their stocks of finished products).
The impact of Covid-16 on the economic cycle:
Triggered in December 2019 in Wuhan, capital of Hubei province in central China, the Covid 19 pandemic reached 186 countries on April 1, 2020, causing the contamination of 865,000 people and causing 43,000 victims. More than half of the world’s population is confined, because to date no vaccine has been found. The purpose of confinement is to limit the extension of the disease, since it has been shown that contamination occurs only through contact between people, or by touching an object contaminated by the virus. According to UN Secretary-General Antonio Guterres, this is the worst global crisis the UN has experienced since its inception. The consequences of the pandemic on the Moroccan economy are very difficult to assess, because no one knows when it will end. But already, we can predict a drastic drop in GDP for the year 2020. In fact, many production and service companies are at a standstill or partial. On the other hand, the crop year promises to be weak due to insufficient rainfall. Foreign currency reserves will suffer from the decline in exports, transfers by Moroccan residents abroad, and foreign direct investment. Certainly, the Economic Watch Committee has already taken measures to help companies and workers in difficulty. But it seems necessary to establish as soon as possible an amending finance law for the year 2020, taking into account the new parameters caused by the pandemic.
In conclusion, the Covid-19 had and will have negative consequences on the economic cycle either world or Moroccan.