COVID-19 Effect on Global Economy – Kabeer Mehrotra

Economists around the world are asking the same question: that how far is there to fall, and can they ever get back?

COVID-19 outbreak, which has been declared as Pandemic” by the World Health Organisation, is having an inauspicious impact on the world economy.A report From the United Nations stated that the global economy could shrink by up to 1 percent in 2020 due to the coronavirus pandemic, a reversal from the previous forecast of 2.5 percent growth.

On 31st December 2019, stock markets were closed on a high note for businesses. Stocks in the US were almost up by 30 percent on the year, those in Japan by 18 percent even in the United Kingdom where there were Brexit uncertainty stocks rose by 12 percent .2019 was the best year for stocks since 2009. The US and China were firmly in an artistic trade war. The US central bank was bracing the world’s largest economy. At the same time, markets around the world were unaware of the fact that China had informed the World Health Organisation about the string of pneumonia-like cases in Wuhan.Only after three months, this localized health problem turned into a Pandemic.The global economy has become immobile, and questions are being asked as to how will the global capitalism revive once this pandemic ends, and can it ever be the same?The COVID-19 outbreak was happening in China, and countries were unaware of the fact that this outbreak could strike in their county too. But now almost every country is fighting against this pandemic.

Economies have taken a hit, swifter than during the Great Depression. There are reports that state that more than 16 million Americans have filed jobless claims. But it is not just America which is struggling at this time.

More than 80 emerging economies are taking help from an international monetary fund, which is a warning of recession, which could be worse than in 2008.

It is feared that Africa and the European Union could be in another debt crisis. Lockdown in the UK which was imposed after a rise in the number of cases could shrink its GDP by 35% and rise in unemployment by 2 million.

Now the question is how big will be the economic damage; and how long countries will continue to be in lockdown?

China is coming out of lockdown amid reports of coronavirus cases in certain regions, and some European countries like Austria are too relaxing lockdown. Forecasters have started to talk about a steep downturn in the economy, followed by a slow and perhaps uneven recovery. Experts believe it’s a long way till life returns to normal.