As the pandemic COVID-19 continues to spread its webs globally, the financial markets are in the fear of the outrageous downfall of the economy. “As governments continue to work on the best solutions towards handling the outbreak, economic costs are only continuing to grow rapidly, ultimately creating even more losses for nations and their domestic economic sectors,” mentions a report from Saint Louis University. Since nations all over the world have stopped imports and exports and banned domestic as well as international flights, the global market is witnessing a shortage of labour, the inability to get raw material and subsequently the markets cannot expand their production and business overseas, especially in the East Asia region. Business moguls like Apple and Microsoft, whose main market is centred in China, are facing huge losses.
Tourism has hit the rock bottom due to this outbreak. People are stuck in other countries and some of them are even placed in quarantine. The aviation industry is facing the biggest pitfall due to this once-in-a-century pandemic. European and American carriers’ share prices have declined faster even than the globe’s COVID-struck stock markets. On March 5th the International Air Transport Association (IATA), a trade group, projected a possible hit to worldwide revenues of up to $113bn this year. That is one-fifth of last year’s overall revenues and four times higher than IATA estimated in February when the coronavirus was still believed to be a Chinese problem rather than a global one.
“We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September,” said Richard Kozul-Wright, Director, Division on Globalisation and Development Strategies at UNCTAD (United Nations Conference on Travel and Development).
The UN trade agency has warned that COVID-19 likely to cost the economy $1 trillion during 2020. People are not at work because they are sick or quarantined, thereby companies have asked employees to work from home. In such a situation, demand stimulus will merely boost inflation, potentially leading to stagflation (weak or falling GDP growth alongside rising prices), as happened during the 1970s oil crisis, when another important production input was in short supply. The world can only pray for a cure for COVID-19. Hopefully, as soon as the coronavirus air clears, literally and figuratively, the global economy will bounce back with more power and success.
Dibyasha Das