Has the humankind ever imagined that an invisible micro-creature to the naked eye, a virus, can drop them on their knees to its surrender?
Has there been a scenario of this kind hitherto that hit the entire world demography and pulled down in every aspect possible?
Has anyone ever dreamt of such an unforeseen plummet in the global economy just because of a microscopic organism?
A zillion such puzzling questions arise and probably this pandemic makes the world populace preset a bearance to such future outbreaks in terms of health, hygiene and economy.
How did corona virus affect the World Economy?
Corona virus, which was first detected in China has spread its wings of infection in more than 185 countries. Its outbreak has left businesses across the globe counting the costs. As lockdown has formed an essence to contain the virus outbreak, many countries and world capitals have halted major industrial production and the work mode of organizations have turned up chairs for their employees, on the technology platforms enabling them to work from the places of their stay.
Global shares, oil prices, travel and tourism industry, hospitality chain, fields of cinema, sports so on and so forth have suffered a major hit which has tend to a risk of recession. All these happenings are due to stagnating of the workforce, unemployment caused due to layoffs, pause in trading and the foremost factor is locking the movement of people. The International Monetary Fund (IMF) has revised the global GDP to 3% which was estimated to a growth of 3.3% just three months ago. It is far worse than the financial crisis that occurred back in 2007-2008.
How long is this economic slow-down going to be?
The world is almost entrapped in the economic slump owing to the pandemic spread and its reconfiguration cannot be at an expected pace because the fear to interact and gather is yet instilled in people. So, as long as human interactivity remains a menace, there is no scope of businesses returns to normalcy down the timeline in the near future. Public health is above all in concern rather the economy.
Even after the unlock, people may be less inclined to move in crowds albeit the virus being contained to a large extent. When the virus quells, enabling people to snap back into a usual go of life, there may be a resurrection in the curve of economy. Once, the virus is completely tamed through medication (no one knows when it’s probably going to happen), there will be many challenges to confront for the economic revival.
“Psychology won’t bounce back”, said an economist named Charles Dumas “As people underwent a real shock, there is certainty in change of behavioral patterns which may not be forever, but lasts for a long while”. Everything depends on how long it lasts, but if it is for a long while, then it is going to be the mother of all financial crisis because people form the basis for the survival of the nation’s economy.
Why stock markets are recovering but the economy is still slowing down?
Stock markets had a massive melt worldwide earlier during the corona virus crisis but somehow seem to be in surge apart from the snail walk of the economy in this pandemic scenario. The stock market is taking shape and projecting up in graphs in recent weeks as if the pandemic vanished away in time with all the devastating impact on the economy. The gap has never been so long before between the markets and the economic data.
It’s definitely onerous to pinpoint what exactly moves the market. But there are a few in consideration to explain the happening.
1. “Prop up markets by pumping money into the economy”, is something done by American and some of the European governments. Their amount of spending so far constitutes one-third of the GDP in a short time period.
2. TINA- There is no alternative, is the way investors are going through. They do not have a lot of places to go with their money as the returns offered by bank FDR and bonds are very low. The real estate is dead and the gold prices pitched in price. Hence, investing in stock markets may lead to their rescue.
3. A fear of missing out has griped in the investors and it seems that the retail investors are playing the stock markets in this quarantine period.
Sometimes, the stock market is considered to be a leading indicator of the economy but no one knows what’s really going on. It is admitted by many traders, experts and analysts that everyone is operating in a black box.
Is there going to be a ‘Second Wave’ of Corona virus?
As the curve tends to flatten with the decline shown in the virus affected people in certain countries, the respective governments are freeing the movement of people with certain guidelines to be followed. Industries, transportation, e-commerce etc., are open to functioning to revive with the economy but are operating within the bounds.
As lockdown restrictions across the world begin to lift up, we are definite to give another chance to virus to flourish back. All these happen if the unlock happens too earlier or if people may think it’s over which isn’t yet. If we let the way for a second go, then the consequences just flow out of our hands.
An economy can never be revived with the aid from the IMF or World Bank and the countries have to look up to each other to obtain help and a strive of generations may cause a revert back to the economic trends which are seen before the pandemic.
How to survive this global economic collapse?
The COVID-19 pandemic is a public health emergency which leads to sickness and death. As lockdown is necessary to contain the disease, it, in turn, ceased the economic activities. It is expected by many expert economists that there will be a double-digit decline in the second quarter of 2020. Many firms go out of business and millions are likely to lose their livelihood which in modern history is unprecedented. Moreover, it is pretty difficult to predict whether the revival in the economy will be a V-shaped or U-shaped curve.
Making a living post-pandemic seems daunting. Indian industries must turn self-reliant in production and manufacturing with low or zero reliance on imports from foreign countries. ‘Make in India’ must prosper in our country as the government reaches us to support through which the Start-up era makes bloom and thus job opportunities can be created. This pandemic has left us a long term drop in the economy to restore with and also taught us to be future safe and go the distance against for such future happenings.