by our special correspondent : The novel corona virus that had affected nearly 1 million population worldwide and killing around 54 thousand including 72 in this country is no short of world war 3. It will be a hypocracy if we pass of this covid attack as just a pandemonic or endemic.
However covid attack is mainly on the world economy. Noted economist, Junaid Kamal Ahmad, talked about how the coronavirus impact is different from the financial meltdown of ’08, saying, “what is really different is the financial shock was an attack on the demand side of the economy. Here it is a supply shock.
The Coronavirus pandemic is having a strong impact on the global economy. Questions are rife about the possible economic and financial fallout of asking a third of the world’s population to stay home and shutting down factories.
Is a systemic financial crisis likely, maybe along the lines of the 2008 crisis 12 years ago.While in 2008, economies simply needed to be stimulated for demand to rise, and for the crisis to end, this time around it isn’t as simple.
Countries around the world now face a fine balancing act of slowing an economy down to deal with a health crisis, while not holding it too far back that a rebound would become difficult.It is this sequencing that is extremely important, and countries around the world are doing it differently, Ahmad said, giving the examples of US, Sweden and India.
In the United States, the federal government has used a bottom-up approach, where different states are slowly being locked down separately. This then adds up to the whole country under some version of restricted movement.
The 2019–20 coronavirus pandemic has had far-reaching consequences beyond the spread of the disease and efforts to quarantine it. As the pandemic has spread around the globe, concerns have shifted from supply-side manufacturing issues to decreased business in the services sector.Some economists suggest that China’s economy may contract for the first time since the 1970s.
Caixin’s purchasing managers index for the services sector of China’s economy fell to 26.5 in February 2020, the lowest figure recorded since the survey’s advent in 2005, and car sales dropped 86% in China in February. As the coronavirus spreads around the world, the stock markets have experienced their worst crash since 1987.
Many countries with large economies, such as Italy and Spain, have enacted quarantine policies. This has led to the disruption of business activities in many economic sectors.
Impact of Coronavirus on the Indian Economy
Up to a large extent, it will impact the Indian industry. In imports, the dependence of India on China is huge. Of the top 20 products (at the two-digit of HS Code) that India imports from the world, China accounts for a significant share in most of them.
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 fertilisers 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.
Graphics by – Piyari Nandi.
