Question

1. How would you describe the current situation in macroeconomic terms? What are the macroeconomic issues in our future?

Answer 1

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Introduction

While governments and international organizations have been planning for a global pandemic for years

The coronavirus outbreak requires action from governments around the world. This includes policies to protect the health of citizens and to support the economy, all while safeguarding governments’ financial stability. This column draws on experiences from past viral outbreaks to outline ten lessons for calibrating the correct policy response. Funding for health care systems should be prioritized, and targeted support for households and businesses is crucial. The rising costs and decreasing revenues for governments will also be challenging, and will likely require assistance from central banks as well as international and regional institutions.

1 Budget deficit

when taxes collected are less than the amount of government spending, the difference between taxes and government spending is a budget deficit and in current COVID-19 situation government is spending more on hospitalization and set up new infrastructure that lead to huge investment

2) Force Majeure

When an economy which does not allow international trade or the movement of financial assets into or out of a country, I.e Recent COVID-19 stopped all activities of international trade

3) Economic policy response

The economic damage from the COVID-19 pandemic is already tangible. In response, fiscal and monetary policies have been introduced by many major economies. This column discusses results from a latest Centre for Macroeconomics survey on the policies best suited for dealing with the economic crisis in the UK. Broad consensus exists on the need to support households and businesses, through unemployment benefits, credit support, and direct transfers. Likewise, a substantial share of economists agree that higher public debt burdens should not be a concern in the process of supporting the economy.

4) corporate cash crunch

The coronavirus pandemic has endangered the liquidity position of not only SME firms, but also large listed firms. This column uses firm-level data from 26 countries to study how long it may take for these listed firms to become cash constrained, and what kind of interventions would be most effective. It concludes that while bridge loans would cost governments almost twice as much as a six-month tax deferral, the policy seems justified given the higher efficacy in preventing a global cash crunch.

B) Macroeconomic issues in our future

Below are the industries those goods / service demand and supply are badly affected due to Corona virus

1) Technology Business Impact

Coronavirus has a mixed impact on tech companies. With work-in-isolation policy being a mandate for employees, there are companies that make the most of it in terms of profit. For example:  

· Slack Technologies Inc. confirms that due to the global fallout from COVID-19, there is a surge of interest in workplace-collaboration software.

· Zoom, an enterprise video communication solution is one of the most downloaded business apps in the US on Apple Store in the 2nd week of March 2020 (according to App Annie).

2) Insurance

The rise of coronavirus cases may end up with the demand for certain insurance types. As the COVID-19 virus continues to dominate the headlines, there is a hike in demand and awareness about insurance plans for health and life coverage.

3. Sports & Entertainment

Movie theaters are temporarily locked down in parts of India, amidst the COVID-19 spread.

4.Travel & Tourism

Airlines are drastically cutting flights and flight rates as more people have decided not to fly during the outbreak. According to the International Air Transport Association (IATA), global airlines may lose $113 billion in sales if the coronavirus continues to spread at this pace.

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