The Economic Impact of COVID-19

WHO declared COVID-19 as a PANDEMIC

                  The crisis of health is directly proportional to the crisis of wealth. People are losing their confidence in the economic activities. Our simple life is become to complex and complicated for fighting against coronavirus.

The OECD has taken the unusual step of presenting two equally likely scenario - one in which the virus is brought under control, and one in which a second outbreak hits before the end of 2020.

Economic impact on Global Scenarios                           

 COVID-19 is reducing the GDP rate of the economy.

• According to OECD(organisation for Economic Cooperation and Development), the Covid-19 pandemic has triggered the most severe recession in nearly a century and is causing enormous damage to people's health, jobs and well-being.
• People are avoiding activities like going out shopping, restaurant, pub ect. Which is reducing the consumer demand.
• The worst affected economic zone tour and travel, hospitality and entertainment, low skilled people, young, and informal workers.
• As restrictions being to be eased, the path to economic recovery remains highly risk and vulnerable to a second wave of infections.
• Most of the government has closed down business activity in many sectors to reduce the infection of the virus and limit the number of death which caused widespread economic hardship.

If a second outbreak occurs, triggering a return to lockdowns, world economic output is forecast to plummet 7.6% this year, before climbing back 2.8% in 2021. At its peak, unemployment in the OECD economies would be more than double the rate prior to the outbreaks, with little recovery in jobs next year.

If second wave infection avoided, global economic activity is expected to fall by 6% in 2020 and OECD unemployment to climb to 9.2% from 5.4% in 2019.

Economic Impact of Lockdowns :

Euro area GDP is expected to plunge by 11.5% this year if second wave will avoided more than 9% hit, GDP of United States hit of 8.5% and 7.3% respectively, and Japan 7.3% and 6%.

Emerging economies such as Brazil, Russia and South Africa - GDP plunging by 9.1%, 10%, and 8.2% respectively in case of double hit scenario, and 7.4%, 8%, and 7.5% in case of single hit.

India's and China's GDPs will relatively less affected, with a decrease of 3.7% and 7.3% respectively in case of a double hit and 2.6% and 3.7% in case of single hit. 

Impact on Indian Economy

GDP rate of the country is reducing due impact of COVID-19.
* The OECD has reduced growth forecast for 2020-21 by 110 basis points(bps) to 5.1 %.
Business confidence, financial markets and travel sector, including disruption to supply chains.
* Pharmaceutical sector is also affected due to the imported pharma raw material from China is reducing.
* On 28 February, the Indian stock market registered one of its worst crashes in a single day.
* On 3rd March, sharp drop in Indian currency due to Coronavirus.

* Strictly lockdown has increased unemployment rate approx 27.12%.
* Most of the industry located in urban area but labours are migrated from urban to rural. Lack of  labours.
* According to Index of Industrial Production (IIP) - Industrial production fell by 16.7% in March. Almost all industries are affected.
* Stock Market has tumbled.
* Demand of goods and services is low.
* Poverty level is increasing.

Indian Government Initiatives for Economic Recovery :

* Pradhan Mantri Garib Kalyan Package (PMGKY) - Transfer money directly into the accounts of the poor. Old age pension has been started.

* Atma Nirbhar Bharat - Prime Minister announced economic stimulus - worth Rs. 20 lakh Crore aimed towards the achieving the mission. This mission for 'Vocal about Local'.

* Ease of Doing Business for Corporate :
To improve in 'starting a business' and 'insolvency resolution' have contributed to overall improvement in India's ranking on EoDB.
* Direct listing of securities by Indian public companies in permissible foreign jurisdiction.
* Private company which list NCDs on stock exchanges not to be regarded as listed companies.
* Including the provision of part IXA (Producer Companies) of companies Act, 1956 in companies Act, 2013.
* Power to create additional / specialised benches for NCLAT.
* Lower penalties for all default for small companies, one person companies, producer companies and Start Ups.

Revival of Post- COVID-19 Indian Economy :

The Technology Information, Forecasting and Assessment Council (TIFAC), an autonomous technology think-tank under the Department of Science & Technology (DST), Government of India, is preparing a white paper to strategies revival of post-COVID-19 Indian economy.

It would mainly focus on strengthening Make in India initiatives, commercialisation of Indigenous technology, developing a technology-driven transparent Public Distribution System (PDS), efficient rural health care delivery, reduction of import, adoption of of emerging technology domain like AI, Machine Learning, Data Analytics and many more. It will be soon submitted to the decision making authorities of the Government.

The current Pandemic (COVID-19) is affecting the human life of both developed and emerging economies, with the impact spread over almost all sectors ranging from manufacturing to trade, transport, tourism, education, healthcare, and so on. The extent of the economic impact will depend on how the pandemic outbreak unfold and also the containment strategy of any nation. TIFAC's team of scientists from a range of disciplines is exploring the best methods to revive the Indian economy and reduce the impact on it post COVID-19. They are also designing future strategies to face similar situation.

Assessment :

* Audit

* Quality

* Evaluation

* Information

* Procedure

* Performance

Global Measures

* WHO declared COVCD-19 was a public health emergency of international concern.
UN's Central Emergency Fund released $15 million Dollar for fight against COVID-19 
vaccines are being developed.

* Policymakers have used a vast array of exceptional  measures to support healthcare systems and people's incomes, as well as help businesses and stabilise financial markets.

* The economy and ordinary life are returning to normalcy in a controlled and phased manner. Expert suggestions - " we must learn to live with the virus".

OECD Secretary-General Angel Gurria said: "Uncertainty is clearly extreme in the current context, but the implications of that for macroeconomic policies are not symmetric. Policymakers were right not to be too slow to introduce emergency measures, and they should now guard against being too quick to withdraw them".

"How Government act today will shape the post-Covid world for year to come,".

OECD Chief Economist Laurence Boone said: "Extraordinary policies will be needed to walk the tightrope towards the recovery. Restarting economic activity while avoiding a second outbreak requires flexible and agile policy making.

She also said: "Higher public debt cannot be avoided, but debt-financed spending should be well targeted to support the most vulnerable and provide the investment needed for a transition to a more resilient and sustainable economy".

She added: "Government must seize this opportunity to build a fairer economy, making competition and regulation smarter, modernizing taxes, government spending and social protection," in addition "Prosperity comes from dialogue and cooperation. This hold true at the national and global level".

The Outlook calls for stronger international cooperation to help end the pandemic more quickly, speed up the economic recovery, and avoid harming the catch-up process of emerging-market economies and developing countries. It also argues for encouraging more diversification of sources locally and internationally.

 

Hope for Global Village will be soon on their daily routine...
#Fight against COVID-19
#Hope for better Future...

References 

E-book

OECD