Covid-19 Impact On Global Economy – Free PDF Download

INTRODUCTION

• Amid the coronavirus pandemic, several countries across the world resorted to lockdowns to “flatten the curve” of the infection.
• These lockdowns meant confining millions of citizens to their homes, shutting down businesses and ceasing almost all economic activity.
• Now, as some countries lift restrictions and gradually restart their economies,
• Here’s a look at how the pandemic has affected them and how they have coped.

COVID-19 AND GLOBAL GROWTH

• The IMF’s estimate of the global economy growing at -3% in 2020 is an outcome “far worse” than the 2009 global financial crises.
• Economies such as the US, Japan, the UK, Germany, France, Italy and Spain are expected to contract this year by  9, 5.2, 6.5, 7, 7.2, 9.1 and 8 per cent respectively.

OIL AND NATURAL GAS

• Due to the fall in travel, global industrial activity has been affected.
• Oil prices fell further in March as the transportation section, which accounts for 60 per cent of the oil demand,  was hit due to several countries imposing lockdowns.
• Not only oil, early this year in China, due to Covid-19- related containment measures, the demand for natural gas fell,
• As a result of which many Chinese LNG buyers halted their imports as storage tanks filled.

INDUSTRIAL METALS

• Due to lockdowns in China, followed by in the US and Europe, the demand for industrial metals  reduced as factories shut down.
• As per IMF, China accounts for roughly half of the global demand for industrial metals.

FOOD AND BEVERAGES

• IMF projects a decrease in food prices by 2.6% in 2020.
• In the lockdown period, while the price of cereals, oranges, seafood and arabica coffee has increased,
• Prices of tea, meat, wool and cotton have declined.
• Further, the decline in oil prices has put a downward pressure on the prices for palm oil, soy oil, sugar and corn.

HOW HAVE COUNTRIES COPED?

• According to an assessment by the World Economic Forum (WEF), supporting SMEs and larger businesses is crucial for  maintaining employment and financial stability.
• In India, Finance Minister Nirmala Sitharaman has announced some details of the Atmanirbhar Bharat Abhiyan  package, to provide relief to MSMEs in the form of an  increase in credit guarantees.

CONCLUSION

• Further, even as economic activity resumes gradually, the situation will take time to normalise, as consumer behaviours  change as a result of continued social distancing and  uncertainty about how the pandemic will evolve.
• For instance, in its World Economic Outlook report for 2020, the IMF mentions that firms may start hiring more people  and expanding their payroll only slowly, as they may not be  clear about the demand for their output.
• Therefore, along with clear and effective communication,
• Broad monetary and fiscal stimuli will be required to be coordinated on an international scale for maximum impact,  and, “would be most effective to boost spending in the recovery phase.”

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