Question

discuss the impact of Covid 19 on (global) financial markets. Please limit your report to no more than 3 pages in total.

Answer 1

Coronavirus has spooked the global financial market and it has clouded the Global markets with a lot of uncertainty .At the beginning of the Year, almost all the Global markets where trading at all time high, due to infusion of liquidity and support of Central banks along with growing economies but once the fear of Corona virus unsettled the Global markets, the volatility went up like never before and majority of the Global markets crashed into bear market territory.

coronavirus has led to sn environment of uncertainty in which there is no clear direction and the economy have gone into shutdown so businesses are not physically operational and the sales have been sharply cut. It has let to monetary easing by central banks across the world as they have cut the rates to almost zero percent in anticipation of a global recession and they want to support the economy by announcement of bailout packages.

coronavirus has led to shrinkage in global demand and that has led to revenues of business is coming down and simultaneously affected a lot of unemployment going up, so disposable income of the people has gone down and it has led to the demand reduction and Gross Domestic product reduction as well, so Central banks are announcing aggressive rate cuts in order to counter it, but it is not practically feasible for a long period of time because economies are still shutdown and there is no clear path visible yet.

The growth prospects and future targets have sharply been cut down of various emerging Markets and developed markets because there been a sharp shrinkage in production and manufacturing across Global spectrum and various sectors of economy are already showing the signs of financial distress as it can be reflected through Airlines sector which is on the verge of reporting miraculous losses, and they are expecting government to come to the aid of them in order to support them with fiscal bailouts.

So it can be said that coronavirus has let to universal slow down and it has not been countered yet, as the disease is still spreading and the economies are into a long-term recessionary phase as been projected by various international agencies, so there is a high need for protective measures in order to counter prolonged recession due to covid-19.