Question

Discuss the economic impacts of coronavirus, please clearly and 700 words

Andrew Jim Moore

Answer 1

The Covid-19 pandemic shows no signs of fading with more than 20 lakh people infected worldwide and 1.27 lakh dead. Lockdowns remain the only way to limit its spread as vaccine has yet to be found. The lockdowns, however, are also driving major economies to the brink The International Monetary Fund (IMF) has revised its global GDP growth forecast from 3.3 per cent only 3 months ago to a 3 per cent contraction, something unprecedented since the Great Depression of the 1930s

Investors worry that the spread of coronavirus will kill economic development and may not be enough policy intervention to stop the decline. In reaction, several nations, including the United Kingdom, have seen central banks cut interest rates. In theory, that should make borrowing cheaper and stimulate spending to boost the economy. Global markets have regained some ground in late March after a $2 trillion (£1.7tn) coronavirus aid bill approved by the US Senate to support employees and companies.

All but dried up the market for gasoline, as lockdowns around the world have trapped people indoors.

A conflict between Opec, the community of oil producers and Russia, had already affected the crude oil price. Coronavirus further pushed the price down. That usually means more wealth and more new employment as the economy grows. Typically over three months or a year, it is measured by looking at the percentage change in gross domestic product, or the value of goods and services produced. But this year the International Monetary Fund (IMF) says the global economy is expected to contract by 3 percent.

The travel industry suffered serious damage, with airlines cutting flights and customers canceling business trips and vacations. Governments around the world have imposed limits on travel to try to contain the virus. Owing to the March coronavirus outbreak, the EU banned travelers from outside the bloc for 30 days in an unprecedented bid to seal their borders. In the US, the Trump administration has banned passengers from entering the US from European airports.

The supply chains of major corporations such as construction equipment manufacturer JCB and carmaker Nissan have been affected by the restrictions. Shops and vehicle dealerships both registered a fall in demand. Chinese car sales, for example, dropped by 48% in March. When buyers stay away from showrooms, more carmakers like Tesla or Geely are now selling vehicles online.

The crisis is expected to strike especially hard on workers in low- and middle-income countries, where the proportion of those employed in informal industries, and therefore having restricted access to sufficient health and social security, is higher. To make matters worse, it is likely that the anticipated large job losses among migrant workers will knock on effects on economies heavily dependent on remittances. In addition, the stabilization policies in advanced economies have already started to affect less developed countries by reducing trade and investment.

The United Nations (UN) expressed concern that the COVID-19 crisis would result in decades of progress in the fight against poverty being reversed, and that already high rates of inequality within and between countries will be exacerbated further. Hence the crisis will eventually and adversely impact the adoption of the Sustainable Development Agenda 2030. The COVID-19 pandemic is predicted to affect almost all SDGs in a negative way. The global recession would also have a serious effect on developed countries' prospects for industrialisation.

Some policy analyzes in the existing COVID-19 pandemic literature differentiate between short-term targets and medium- to long-term targets. In the former case, the aim is to tackle the immediate health crisis, secure income-generating opportunities and safeguard the activity of vital supply chains, i.e. essentials and health supplies. In the above cases, economic impact cushioning strategies emphasize steps to restore supply chains, increase demand, and incentivise sustainable investment.