Question

Discuss how covid19 affects the economy of a country

Answer 1

The impact of COVID 19 on the Economy is still uncertain from the government's point of view. In order to protect from the Covid19, all the affected countries resorted to lockdown. This involves the shutting down of all the economic activities around the country. As per the data of IMF, the global economy will fall by 3% in the year 2020. And this is the biggest slowdown ever since the depression of the 1930s.

Many countries are gradually opening the economies after the lockdown got lifted. We can observe that this Pandemic has pushed the economy into recession. Due to the shutting down of Economic activities, many people have lost their jobs.

The overall burden on the government has increased in order to facilitate and uplift the welfare of an economy. Government expenditure increased on health and sanitation. Also, the government started many programmes in order to provide citizens with basic amenities.

Due to the restrictions on travelling, industrial demand and transportation, the price for oil and natural gas has reduced. The demand for Industrial related materials got reduced and hampered their price level. The IIP i.e Index of Industrial Production has declined. Trade and tourism badly got affected. Hence, Countries Income decreased and the expenditure increased.

The economy was facing shortages for food , beverages , cereals etc. This lead to the shoot up in their price. The overall GDP of the affected economies faced a steady decline during this period.