The world economy was facing the implications of US-China trade war over the last two years or more when recently it was hit with another historical event that has not only put human survival at risk but also global market in the form of COVID-19 also known as ‘Corona virus’ of which initially China was epicenter and it wasn’t spread beyond the territories of China till mid-January, 2020 and so was not a concern at international level. It all change in February when more people outside China contracted this disease. It spread like a fire in rest of the world with more than 140 nations affected by it. As a result, World Health Organization (WHO) declared it as ‘Pandemic’. As of now, more than 90000 people have been tested positive and more than 3500(at the time of writing) people died. As a result of surge in global spread of this disease of which cure is not yet known, it is badly affecting economy all around the world.
Internationally, stock exchanges are crashing each day leading to suspension of trading on it in various countries like UK,USA, Phillipines ;global market has become volatile and is in panic mode as evident in bonds, gold and commodities; investors are suffering huge loss not just in India but globally too same thing is happening; international trade has come to a halt for indefinite period of time and it is badly affecting the free flow trade among countries with many nations have closed their borders and air services in order to control the pandemic situation. In light of the ongoing situation, people are being forced to work from home which has further created another economic challenge. Many people are facing either job cuts or wage and income cuts due to non-operational of business sector. Among the sectors of economy, the one which is facing maximum hardship is the manufacturing sector due to non-availability of not just raw material due to limited import- export services but also non-availability of labour.
Various corporations be it huge or small scale business houses, startups, firms have closed their offices until further orders from their governments. There is also panic in not just international market but also domestic market. People are anxiously stocking up essential goods and as a result, there is either shortage of products or they are available at high prices which not all sections of society able to afford.
In such testing time, the world economy is certainly brazing itself to face and survive in COVID-19 hit economy. Many market experts believe the existing market situation will get worse as time progresses and it may result in financial inequality, economic pressure.
IMPLICATIONS ON WORLD ECONOMY
Under government instruction to control the situation, business firms and shops are taking precautionary measure and are not operating. This has certainly disrupted normal business flow both domestically as well as internationally, so now one question which everyone is concerned about is how this pandemic disease going to impact economy, its various sectors, market forces and for how long?
While at this point of time, economist and market pundits cannot predict for how long such market disturbance is going to continue and within how much period of time, situation in market returns to normal, yet they definitely has answers as to how COVID-19 will affect global economy and they have serious concerns. Some economists are of the view that the world is going through recession similar to events occur in 2009 and there is very limited scope of economic expansion. According to ETAuto.com, the USA, EU region is likely to witness negative growth and China is likely to grow at scant rate of 1.5%. India too will face similar growth cut and its GDP is expected to grow at the rate of 5.3% instead of 5.4% by one of the leading global ratings agency Moody. Among the sectors that are worst hit by the pandemic is travel and tourism industry. Many people are on the verge of losing their jobs or salary cut. Unemployment was already high in 2019 and this shutdown has made the situation far worse. Similar situation is happening in USA where reports suggest that unemployment rate is highest since 1929-30 and there entertainment industry is worst hit due to shutdown of movie theaters, productions.
HOW THE GOVERNMENTS HANDLING IT?
However, governments around the world have declared or in the process of declaring ‘economy booster packages’. In USA, President Trump has announced to purchase corporate bonds worth $1 trillion and has speed up the plans to deposit $1000 directly to American citizen’s bank accounts to give them emergency financial aid. UK, Spain and France have also announced emergency financial packages for payment to employees and providing loans and guarantees to companies to survive economic blow it is facing due to corona virus. India has set up ‘Covid-19 Economic Response Task Force’ to decide on relief packages for sectors hit by pandemic outbreak as soon as possible.
In this dark economic time, there is little hope of economic recovery as much depends on how soon medical professionals and researchers come up with a ‘cure’ that is effective in trimming the hazardous effects of virus on human race. One ray of hope is that in the last 2-3 days , China has reported zero locally transmitted cases and if the same trend continues will benefit China on path to economic recovery soon. But until then, we have to brace the impact of the impact of this pandemic disaster with the hope for a ‘Better and Prosperous economic future’.