Coronavirus, a pandemic that originated from China, has taken the complete world with a storm. Countries after countries, people after people are getting infected by this deadly virus. Coronavirus has caused more than 24 thousand deaths all around the world. Many major countries like the USA, China, India, Spain, Italy, and Russia are in a complete lock downstate. The above-listed countries including Germany, the United Kingdom & France are among the top 20 economies of the world & play a vital role in the global economy.
A global pandemic of this scale is inevitable. Recently the USA has taken over China for the most number of cases caused by this outbreak. With zero possibilities of ending this any time soon, there’s no one who can assure you what course the economy will take as no one knows how this pandemic will play out. Many economists believe that the world will be plunged into a greater depression and it will take generations to recover from it. With no signs of this outbreak being slowed down, let us have a look at what all industries it has already hit hard and will keep on doing the same until it is completely stopped.
The unemployment rate could hit 30 percent in April or that the economy’s output, as measured by GDP, could drop 30 percent from April through June. So far, the economic ride down has been sharp and steep, in loss of jobs, income, profits and paper wealth. Honestly speaking we have not seen the real death toll rises it’s still not clear how many people are going to suffer due to this outbreak. People are asking the government to lay off the monthly EMIs. Many companies have already taken crucial steps to stabilize the market by providing funds to their employees. Let us have a look at what the coming days are bringing to us.
The Next Few Months
Having fallen behind, it will be very difficult for the world, but not impossible for the world to get back up. People from around the world who were infected several days ago will only start showing symptoms now, even if they isolate themselves in the meantime. Italy and Spain had already offered a warning to the world that the number of cases of not slowing down in both countries. Their hospitals are out of room, supplies & staff. They are seeking help from other remarkable countries but due to the pandemic, every country is in self-isolation. A study released by a team of Imperial College London that if the pandemic is left unchecked and if it grows at the same rate then it will directly kill 2.2 million people all over the world by the end of the summer.
The Government is busy checking and isolating who has travel history from other countries. The effects of the pandemic on economic activity are being felt far and wide, far beyond the airline, travel, tourism and hospitality sectors. Analysts see some impact on the January-March 2020 quarter gross domestic product. But the really deep cut will be seen in the April-June quarter (the first quarter of 2020-21), further exacerbating the slowdown in consumption and activity being witnessed in the Indian Economy.
We have a 4.3 percent of GDP growth for January – March and dropping to maybe 3.9 for the next quarter for April-June. However, as we have already mentioned that the situation is very fluid and will keep on changing depending upon the outbreak. Chief Economic advisor Krishnamurthy Subramanian had forecast a GDP growth of 6-6.5 percent. Even after the outbreak of COVID-19, he has not changed his forecast. If everyone adheres to social distancing if testing can be rolled out, and if enough masks can be produced, there is a chance that the world can still avert the worst predictions about COVID-19, and at least temporarily bring the pandemic under control. No one knows how long that will take, but it won’t be quick. It could be anywhere from four to six weeks to up to three months.
Why is China’s Economy Important for the World?
Economists have been using the SARS epidemic of 2003 to put the coronavirus outbreak in context. In 2003, the SARS epidemic is estimated to have shaved 0.5 percent to 1 percent off China’s growth that year and globally it caused the loss of $40 billion of the global GDP. But the real problem lies right in front of us right now. In 2003 China’s economy accounted for roughly 4 percent of the world’s GDP & now it is 16.3 percent. However, China’s growth is weaker than it was in 2003. Its confidence had been shaken by the dual effects of general economic deceleration and the U.S.-China trade war escalation.
China is the world’s biggest producer of manufactured components. When Chinese factories shut down, the widgets that go into everything from Apple’s iPhones to construction machinery become harder to find. The impact reaches small businesses too. In Hong Kong, a jewelry designer found that his automated, digitized Chinese suppliers have gone offline.
Impact of Coronavirus on Various Industries
It’s a blessing in disguise for the Asian countries that get oil from other countries. The negative impact of the pandemic in the southeast countries and it’s economy will get cushioned by the fall in crude oil prices because it will help to bring down the current deficit, and inflation that the country is suffering from. But it will certainly hit the global economy as the crude oil prices play an important part as it is important for everyone’s needs.
Markets in Asia had seen big falls, with Japan’s Nikkei share index dropping by 2.7%. The 3.6% drop in the FTSE 100 wiped out the gains seen earlier this week on the index. Shares in travel companies again saw some of the steepest falls. Banks also took a hit, as investors anticipate that interest rates might be cut in order to make borrowing cheaper for companies and consumers to keep the economy buoyant. Energy firms were under pressure as well, after the collapse of a proposal by major oil producers to keep oil supply in a check sent oil prices tumbling more than 8%.
Many of the IT services companies are going to be impacted by multiple factors due to the virus. Currently, many business companies are facing difficulties in continuing their business & have come up with another plan of work from home. The IT companies from all around the world are also in dilemma with this disaster recovery. Even though IT companies are allowing work from home, the output will not be the same from the workforce of these IT companies.
The economy is experiencing a shock more sudden and severe than anyone alive has ever experienced. There is no one in hotels, no flights can be seen leaving the ground. Restaurants and other small businesses are closed until further notice by the respective governments. People with low incomes & who live on daily wages will be hardest hit by social distancing measures. After the pandemic, people who recover from COVID-19 might be shunned and stigmatized, as were survivors of Ebola, SARS, and HIV. Health-care workers will take time to heal: One to two years after SARS hit Toronto, people who dealt with the outbreak were still less productive and more likely to be experiencing burnout and post-traumatic stress. People who went through long bouts of quarantine will carry the scars of their experience.
Add on the world’s historically low level of interest rates, and high level of debt—which limits the room for maneuver and it’s clear why economic policymakers, like everyone else in the world, will be hoping the outbreak can rapidly be brought under control.