Cutting down the interest rates won’t have an impact on the spread of COVID-19. It is the most recent and breaking news that has affected a large part of the globe and is continuing to do so. The virus responsible for the spread of this disease namely Coronavirus was firstly identified in Wuhan, China.
The aggressive spread of the disease had a huge impact on the global economy lately. In the last two weeks, the virus has travelled to the United States and other developed countries. China, being the topmost trading country has witnessed a major fall back which is to 5.2% from 6% in the starting of the year 2020. “As COVID-19 continues to spread, production in hard-hit countries like China has decreased significantly, disrupting supply chains across the globe including in the United States, which depends on China for much of its domestic production by way of parts.”, said Robert Triest, professor and head of Economics department at Northeastern University.
The spread of the disease at such a high rate has already resulted in shutting down of airports and tourism activities which have cost the global economy approximately $1 trillion. The Federal Reserve System has decided to cut down the rate of interest by half a percentage globally to help in making funds available in the case of emergency. As per the latest news, the Federal Reserve System is expected to be in shortage of ammunition in order to cope up with the destruction made by the virus to the global economy. It is being estimated that there is going to be a global financial crisis which can be worse than the one in the year 2008.
Although the spread of the disease is controlled by various precautions taken by the citizens as well as the government, China is struggling to cope up with the loss. The loss of China has not only affected China-based companies but many other companies including Apple and Nissan. These companies have their factories in China due to cheap labour and better availability of spare goods and parts.
The cure for this bioweapon needs to be processed rapidly in order to save the global economy from facing a huge fall. Necessary steps are required to be taken in order to control the spreading of this virus as well.
Mrinal Garg
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