Question

Compare the effects of the shocks on the economy to business decision making in the public sphere during the great depression and the covid19 recession

Answer 1

PANDEMIC SITUATION - COVID19:

• According to the researchers, the pandemic situation may occur at 10 to 50 years intervals as a result of emergency of new subtype from virus re-assortment.
• We should make efforts to make learn from consequences of pandematic outbreaks. to prepare for our society.
• Although society has been hit by several pandemics before,it is difficult to estimate long term economic.

The coronavirus pandemic has restricted international mobility and the revenues generated by this sector will take a major toll on the GDP growth rate. It may bring a downfall of 0.45 per cent in the growth rate of GDP. The aviation sector in India currently contributes US$72 billion to India's GDP.

BUSINESS DECISION MAKING:

Decision making is a central responsibility of managers and leaders. It requires defining the issue or the problem and identifying the factors related to it. Doing so helps create a clear understanding of what needs to be decided and can influence the choice between alternatives.

COMPARISION OF GREAT DEPRESSION WITH COVID19:

GREAT DEPRESSION : In the year 1930, Great Depression was the worst economic downturn in the history of the industrialised world, which lasted from 1929 to 1939. The crisis began after the stock market crash of October 1929, which sent Wall Street into panic and wiped out millions of dollars of investors. Over the next several years, consumer spending and investment dropped, causing steep declines in industrial output and employment as failing companies laid off workers.

“The Great Depression was primarily due to a failure of monetary policy… By April 1933 the broad money supply (M2) had declined by a cumulative and catastrophic 35%.

COVID19:   However, in the present scenario, given the efforts governments across the globe are making, we believe that the virus will eventually be contained but timing the same today and quantifying the economic impact is quiet difficult.

GREAT DEPRESSION : “In the Great Depression, countries did exactly the wrong thing. Since then, we all know what to when a recession or depression is threatened. That is – monetary and fiscal stimulus,” Oliver said.

“Prior to the Great Depression in the 1920s, we saw a massive trade war globally, tariff hikes in the US and other countries did the same thing. We saw monetary and fiscal tightening in various countries across the world going into it, which made things worse,” Oliver said.

COVID19: Even in a global pandemic, to remain in business and employ people, organizations must generate revenue, reduce risk and consider costs. While these are not the only metrics that matter, at the core, an organization must generate revenue (or fulfill its mission) to remain in existence.

“After the GFC of 2008-09, the lack of money growth necessarily implied that fiscal stimulus could not succeed... (whereas after Covid-19) the injection of substantial purchasing power into the US, UK and Euro-area economies in 2020 will almost certainly ensure a vigorous recovery in 2020-21.”

The current pandemic will cause individual economies to plunge into recession; businesses will close down and jobs will be lost at similar levels to that of the Great Depression. Moreover, the pandemic is impacting both industrial and developing countries; whereas the Great Depression was largely concentrated in industrial countries.

After the Great Depression there was a rise in nationalism around the world – as a direct result of the financial, social and emotional hardships of the depression – creating the conditions that eventually led to the second world war.

There has been a similar rise in nationalism, populism and xenophobia during the coronavirus outbreak. Of course, this had been growing for many years before the pandemic, in part as a result of austerity measures that caused financial hardship in the aftermath of the 2007-2009 financial crisis.