Question

Buyers determine demand while sellers determine supply. Both laws of supply and demand establish market forces that make economies work to search for their market equilibrium. The impact of COVID-19 is an unprecedented event that affects the global economy. In the article, the overall retail sales dramatically dropped by 34.8%, with jewellery and luxury goods drop of 67% but supermarkets increase of 12%, in the first five months of 2020. However, online-based consumption, like demand for food delivery, online education (Zoom), stay-at-home activities and online grocery shopping surged dramatically since the outbreak of pandemic.

3) Principle 6 of Economics states, “Markets are usually a good way to organize economic activity”. Hopefully COVID-19 will end some time in the near future. Predict how the retail industry would become in the economy with the aftermath of the pandemic. (300 words)

Answer 1

due to global lockdwon the GDP of mojority of larger countries has been declined.many business have shut down their operation due to lack of demand.due to shortage in demand the production process couldn't be continued and therefore the unemployment increased a lot.with an increase in unemployment the level of purchasing power of the people would decline.

due to pandemic situation people all around the world, are panic and they most of them were relying on their savings and therefore only those businesses would show faster recovery which are dealing with normal goods like groceries,FMCG sectors.the industries with hotel services,tourism,automobile sectors and all the industries which are dealing with non essential goods would not be able to recover from their losses in short run and they all would have make special efforts and need financial aid fromt their respective governments.

we can predict some possible impacts on the retail industy after the Covid-19 as follows-

• due to increasing unemployment people are failing to pay their dues on loan and the banks are facing the issue of increasing NPA (non performing assets) and furthermore the banks are not in favour to provide fresh loans.
• due to sudden and longer period lockdown people have exhausted their saving and therefore the retail segment would only spend their upcoming earning on neccesity goods.
• retail segment woudn't prefer to buy and luxury goods like jewellery or car and would like to save the funds for future purpose.
• the MPS (marginal propensity to save) would be high and MPC (marginal propensity to consumer) would decline which would show an adverse impact on the multiplier of the economy and the fiscal expenditure undertaken by the government wouldn't be much effective.
• economy would be exeriencing vicious circle of poverty.
• there would be lack of start ups of new businesses in the economy because the entreprenuers would be pessimistic.