COVID-19 pandemic and global recession

As COVID-19 spread globally in early 2020, governments imposed lockdowns and travel restrictions that shut down large parts of the services economy almost overnight; global GDP contracted by more than 3% for the year, the sharpest synchronized downturn since the Great Depression. Air travel, tourism, and hospitality were hit hardest, while governments and central banks responded with historic fiscal and monetary support — the US alone enacted several trillion dollars in relief spending, and major central banks cut rates to near zero and resumed large-scale asset purchases. The recovery was uneven: goods demand and asset prices rebounded quickly, helped by stimulus, while labor markets, supply chains, and many emerging economies took longer, and the resulting mismatch between surging demand and constrained supply became a key driver of the inflation surge that followed in 2021-2023.