Corona virus is sweeping the word leaving behind destruction of human life unknown before. The carnage is continuing and there are no signs of putting a stop to it. Scientists across the globe are struggling to find some treatment but not success so far. Political leaderships are making their best efforts to confront the sitation but at the same time are helpless. The lockdown measures are confined to stop the widespread infection but not a solution. Almost one third of the global population is under lockdown.
The economic devastation is going to be much more serious not ever before. Signs of great depression are already looming large. UN Food and Agriculture Organization have stated that the hunger is going to kill much more lives than the virus. In number of African counties, violence has erupted as people do not have mans to survive.
The global economy has witnessed the Great Depression of 1930s, the fall of Asian Tigers in 1997 and the depression of 2008-9, but it is being predicted that this time economic devastation will be at much higher scale. International Monetary Fund has predicted an overall fall of seven percent in global GDP.
Some of the developed Western countries including United States will suffer from negative growth rate. The world’s economy could grow at its slowest rate since 2009 this year due to the coronavirus outbreak, according to the Organization for Economic Cooperation and Development (OECD). The think tank has forecast growth of just 2.4% in 2020, down from 2.9% in November. The GDP of China is expected to decelerate by 1-1.25 percentage points over 2020 because of less production. In China, various cities and provinces are in lockdown mode. China accounts for approximately 19.71% of global GDP at purchasing power parity and obviously it will impact the economy globally. It is estimated that the global GDP will suffer an impact of around – 0.5%. India has wide economic trade ties with china. Import dependence on China will have a significant impact on the Indian industry. India’s total electronic imports account for 45% of China. Around one-third of machinery and almost two-fifths of organic chemicals that India purchases from the world come from China. For automotive parts and fertilizers China’s share in India’s import is more than 25%. Around 65 to 70% of active pharmaceutical ingredients and around 90% of certain mobile phones come from China to India.
It’s only India and China who will survive from negative growth but with a sharp decline in GDP. India’s growth rate has been predicted to be less than two percent. In our country it’s not only GDP (which is only an indicator of growth) but the unemployment it is going to result. Forty crores of our workforce is in informal section and now without any work and income. Struggle for survival is becoming difficult day by day.
Investors fear the spread of the coronavirus will destroy economic growth and that government action may not be enough to stop the decline. In central banks in many countries have slashed interest rates to make borrowing cheaper and encourage spending to boost the economy.
But some analysts have predicted doomsday for the global economy until the pandemic is contained. All sectors of economy but some sectors have come to standstill. The travel industry has been badly damaged, with airlines cutting flights and tourists cancelling business trips and holidays. Governments around the world have introduced travel restrictions to try to contain the virus. Supermarkets and online delivery services have reported a huge growth in demand as customers stockpile goods such as toilet paper, rice and orange juice as the pandemic escalates. In order to stop the spread of the Covid-19 outbreak, many countries across the world have started implementing very tough measures. Countries and world capital have been put under strict lockdown, bringing a total halt to major industrial production chains.
According to KPMG, the lockdown in India will have a sizeable impact on the economy mainly on consumption which is the biggest component of GDP. Reduction in the urban transaction can lead to a steep fall in the consumption of non-essential goods. It can be severe if disruption causes by the 21-day lockdown and affect the availability of essential commodities. Due to weak domestic consumption and consumer sentiment, there can be a delay in investment which further adds pressure on the growth.
The hunger is looming large over major segment of the humanity. Counties with varying economic strength are going to face a tough time, unheard in the human history. The destruction spree of the virus is not showing any sign of stopping as of now. Lets keep our fingers crossed!
Author’s Introduction:
Prof. Subhash Dhuliya
Professor (Culture and Media Studies)
Central University of Rajasthan
