Question

1. Write an essay (minimum of 3000 words) on the following. COVID-19 has caused global turmoil to humankind. Concentrate on the economic impact of this horror and use as many concepts, tools and techniques that you can from this course to analyse the economic impacts of this disease. You are required to include the global oil industry in part of your analysis, but you may include any other industries of your choosing to analyse also. You may concentrate on one country or many if you wish, but how you choose to proceed is up to you. Your essay will be judged on the quality and depth of economic analysis as well as organisation and clarity of your prose.

Answer 1

Covid 19 has affected the entire world badly. It had not only taken lives of people but also spread fear of death among people and has forced the shut down of life. It seems that the whole world has come to a stand still. Both rich and poor nations are unable to safeguard themselves from the harmful impact of Covid 19. According to United Nations The global economy could shrink by up to 1 per cent in 2020 due to the coronavirus pandemic, a reversal from the previous forecast of 2.5 per cent growth warning that it may contract even further if restrictions on the economic activities are extended without adequate fiscal responses.
Europe, Asia, America, Africa , Middle East almost the entire world is suffering from this Covid 19. It has forced the shut down of offices, industries and public transport etc. The temples, churches are closed. Schools are also closed. People are locked in their homes observing social distancing. Medical Staff is working day and night to protect people from this dreadful disease.

According to estimates confirmed coronavirus cases across the world now stand at over 932,600 and over 42,000 deaths.

Lets have a look at the following sectors which are adversely affected by Covid 19.

• Oil Industry With the shut down of transport system the demand for oil has decreased considerably. As per law of demand if supply is more than demand, then prices decline. As a result even oil being sold at low price there are no buyers as there is no requirement.
• Entertainment Industry Beauty Parlours, Malls, Cinema Halls and Gyms are being closed to prevent human interaction. As a result these sectors are facing considerable lossess due to lack of customers and government strict rules and regulations.According to the forecast, lockdowns in Europe and North America are hitting the service sector hard, particularly industries that involve physical interactions such as retail trade, leisure and hospitality, recreation and transportation services. Collectively, such industries account for more than a quarter of all jobs in these economies.
• Tourism Industry. Almost all countries are observing strict lockdowns and curfews. The state, national and international borders have been sealed and the public transport including buses, cabs, railways, airways have been shut down. Itlay the beautiful city has been worse hit and the death toll is increasing day by day in Itlay.
• Trade and Investment All industries have been shut down. There is a sharp decline in consumer spending and investment. This has reduced the imports from developing countries to developed countries.The adverse effects of prolonged economic restrictions in developed economies will soon spill over to developing countries via trade and investment channels.
• World Economy. The decline in commodity-related revenues and a reversal of capital flows are increasing the likelihood of debt distress for many nations. Governments may be forced to curtail public expenditure at a time when they need to ramp up spending to contain the pandemic and support consumption and investment. Governments of different countries have to spend not only on the health care of people but also on giving stimulus packages in the form of incentives and benefits to the citizens, thus increasing the expenditure. People are loosing jobs.The world economy could contract by 0.9 per cent in 2020. The possibility of global recession cannot br ruled out. As businesses lose revenue, unemployment is likely to increase sharply, transforming a supply-side shock to a wider demand-side shock for the economy.The severity of the economic impact will largely depend on two factors - the duration of restrictions on the movement of people and economic activities in major economies; and the actual size and efficacy of fiscal responses to the crisis.

However there are some positive aspects also. These are discussed as follows:

• Industries earning profits As a result of Covid 19 there is huge demand for masks, sanitizers, medical equipments and ventilators. China who has recovered is making huge profits from supply of these products. Online jobs are gaining huge importance. Pharmicists, industries dealing in supply of essential products like vegetables, milk etc are charging high rates as people require these products.
• Pollution Control Due to lockdown all over the world pollution has reduced considerably. The ozone layer has been healed, the air and water has become pure.
• Ecological Balance The complete shut down has helped in restoring the ecological balance. The animlas are returning back to their places which were invaded by humans. The sky has become clear and air quality has improved.

To conclude Covid 19 has shattered the world economy completely. The economic growth will slow down to a large extent and economies will suffer huge losses. But it has taught us a lesson that never understimate the power of mother nature.Once it comes to take revenge then it can devastate everything. Hope the world will revive from this situation soon.