In: Economics
The economic impact of the Novel Corona Virus pandemic is what is confusing most economists at this time. This they believe will bring in the biggest recession in Singapore and across the world, wherein the demand for goods and services is falling rapidly as a result of the lock down measures which have been introduced in the country and beyond.
The economy of Singapore thrives on numerous industries such as tourism, education, recreation etc all of which have been severely impacted by the virus itself. The demand for goods and services in each of the sectors listed is contracting and the resultant is that the total production has also declined and unemployment and low income would prevail without the government taking significant measures to resolve the issue.
We have drawn the following demand and supply graph which will help in understanding, the impacts of the virus on the industry for all of the above listed markets i.e. tourism, education, recreation.
In the above diagram, we see that how prices have reduced from initial to reduced points as indicated. Quantity demanded and produced therefore have also declined which is the reason for price decrease. This has also shifted the equilibrium from initial to reduced equilibrium.
It is important to know, that the demand curve is downward sloping as it indicates higher buying at lower costs and the supply curve is upward sloping as it indicates more profits at higher prices for producers.
The government of the day, should increase spending and reduce taxes on education, tourism as well as the recreation industry which happen to be a major source of income. It should also try and improvise on allowing these to function with new norms and provide direction to the industry as an overall. A tax relief will help in consumers demanding more for these goods once the lock down is lifted and would provide the much-needed relief to the economy as a whole. Also, during lock down providing for people who are not seeing their income rise as a result of the pandemic is also equally important.
Please feel free to ask your doubts in the comments section.