- Considering the safety of citizens the various Government’s decisions in Lockdown have to be fully respected and adhered to
- COVID-19 pandemic is disrupting global supply chains and international trade
- Developing countries would be hardest hit because of higher population densities
We are not even sure whether this lockdown will end on 14th April 2020 in India and on different dates in other countries (safety of citizens is paramount, if we are alive there is something to look forward to and so, the various Government’s decisions in these regards have to be fully respected and adhered to) and even if it ends on the currently decided date, when will the business cycles attain normalcy again is a moot question that will remain unanswered. Hence, the financial position may worsen further.
A news report from the Economic Times of April 2, 2020 (PTI Last Updated: Apr 02, 2020, 11.20 AM IST) states that “The analysis by the UN Department of Economic and Social Affairs (DESA) said the COVID-19 pandemic is disrupting global supply chains and international trade. With nearly 100 countries closing national borders during the past month, the movement of people and tourism flows have come to a screeching halt.”
A Reuter’s article authored by Sharon Begley released on JANUARY 21, 2013 / 5:41 PM / 7 YEARS AGO was clairvoyantly titled “Flu-conomics: The next pandemic could trigger global recession”. Some excerpts from the same are given below to understand what we may be heading for, God forbid!
A COST BEYOND MEASURE?
The World Bank estimated China’s SARS-related losses at $14.8 billion, and although the United States and Europe were largely spared its ravages, the pandemic reduced the global GDP by $33 billion. And here’s a scary thought: As health crises go, SARS wasn’t that bad: It killed just 916 people and lasted well under a year. (916 people is a big number but compared to what is happening today and God knows when it will stop, Sharon is right in writing “just”).
In this critical lockdown situation, all the business activities have got held up completely and the financial situation of all industries and businesses will have suffered very adversely.
A global pandemic that lasted a year could trigger a “major global recession,” warned a 2008 report from the World Bank. If a pandemic were on the scale of the Hong Kong flu of 1968-69 in its transmissibility and severity, a yearlong outbreak could cause world GDP to fall 0.7 percent.
If we get hit with something like the 1957 Asian flu, say goodbye to 2 percent of GDP. Something as bad as the 1918-19 Spanish flu would cut the world’s economic output by 4.8 percent and cost more than $3 trillion. “Generally speaking,” the report added, “developing countries would be hardest hit because higher population densities and poverty accentuate the economic impacts.”
The really bad news is that we may not be hearing all the bad news. Economists who study pandemics worry they may be underestimating the financial toll because they haven’t been considering all the ramifications. (Author – there is no sure way of estimating the financial impact, these data give some useful reference points).
This is the third article in continuation of the earlier article in the series, The Covid Impact – Indian Businesses’ Conundrum & The Lockdown; Is it appropriate? Continue reading, and do write to me with your views and feedback.
