Going viral – How Corona Virus affects the global economy

Main image: An illustration by the US Centers for Disease Control and Prevention of the coronavirus. Illustration: Centers for Disease Control and Prevention/AP

With the unprecedented shock on the economy due to the global pandemic, countries are 

struggling to provide for public health facilities and to sustain economic activities.

The corona virus or the COVID-19 has had a great impact on the global economy so far and 

its quite assured that it will leave its effects on the future as well. The virus first emerged in 

the Chinese city of Wuhan last December. It infected more than 722,196 people causing 

33,976 deaths in at least 110 countries as of 30/3/2020. The fear has rocked the economies 

worldwide and the financial forecasts have been estimated to fall to a great extent. To 

contain Corona virus, the Chinese authorities locked down cities, restricted movements and 

suspended business operations for an indefinite time period. This step is now followed by 

the countries which are in a vulnerable condition. The overview of the epidemic is quite 

significant and can be witnessed by its rapid spread. The number of people affected is one 

of the key economic issues, but the level of disruptions to the economy counts the most.

The fear has also impacted the stock market plunging stock prices and bond yields. The 

supply chain consequences could be felt and some sectors are affected more than others. 

World’s second largest trading nation China’s exports fell by 17.2% for January and 

February, this indicates the situation that the global markets linked with China are facing 

currently. The travel and tourism industries will be the hardest hits. The estimated losses of 

global air carriers range between $ 63-113 bn. As per OPEC the oil prices are at its lowest 

since 2001. The annual global GDP is to fall to 2.4% from an already low 2.9% in 2019 with 

growth possibly being negative in the 1st quarter. The Reserve Bank of India’s monetary 

policy committee has cut the repo rate (the rate at which the banks borrow from RBI) by 75 

basis points to 4.4%. The Finance Minister, Nirmala Sitharaman unveiled a Rs 1.7 trillion 

relief package aimed at meeting the basic needs of the poor who have faced the brunt of 

the unprecedented 21-day lockdown announced by PM Modi. The policy makers and global 

leaders have already geared up in combating the virus through an economic perspective. It 

has been estimated that the cost of the pandemic is going to be very large. Low cost actions 

such as promoting hygiene practices are good for the start but other actions like the 

quarantine and other interventions are cost effective. The economy of the nation will also 

be in distress but we can recover from the same if we work together considering the losses 

the producers and the consumers faced due to the outbreak. In this condition goods must 

not be hoarded and consumers should behave rationally and responsibly as someone’s 

excess demand may lead to someone else’s unfulfilled demand.