More than 1.2 Lakh people have been affected by coronavirus globally. Daily activities have come to a halt as people are scared to step out. If people stop travelling and going to movies theatres, malls, gyms, then the impact could be devastating for our economy.
Currently, global markets are amid the greatest stock market shock since the Global Financial Crisis in 2008 because of coronavirus fears among investors.(Ryan, 2020)
Similarly, India’s stock market torch bearer Nifty 50 has fallen more than 20% from its last peak of 12,420 on 20th Jan 2020. A fall of more than 20% can be considered as a sign of recession and not a simple market correction.
In this post you will see the following:
- Current Coronavirus Outbreak
- 7 Ground-Level Impact Examples
- Macro Impact
- Impact From the Previous Pandemic
- 5 Steps Taken by the Indian Govt
Now, let’s dive into some facts.
Current Coronavirus Outbreak
Source: Reuters Graphics. (Reuters Graphics, 2020)
As on 11th March, the number of cases (people infected by COVID-19) outside China is increasing at a higher rate as compared to the number of cases in China. New cases outside China are far greater relative to mainland cases. (The numbers are given below). (Reuters Graphics, 2020)
Source: Reuters Graphics. (Reuters Graphics, 2020)
Similarly, a total of 62 cases have been reported so far in India. The number of cases has spiked rapidly in the last week.
Unfortunately, Everyone only talks about the stock market correction that was induced by coronavirus and about the surprise Fed rate cut to support the global economy. Further, here are some steps which governments can take to control the spread. “Coronavirus: Why You Must Act Now.“
However, no-one wants to point towards the puny problems of common people.
7 Ground-Level Impact Examples
1. People are cancelling their leisure travels due to the coronavirus outbreak. This is exogenous adversity for the entire tourism and hospitality industry worldwide.
2. International Events are getting cancelled or rescheduled. One example is the Shooting World Cup which was supposed to be held from 15th to 25th March in Delhi. Now, as this event is postponed, the company responsible for all arrangements will suffer losses. (Jat , 2020)
3. In Delhi, primary schools have been shut till 31st March as the number of cases increase. (Agarwal , 2020)
4. The Delhi government has suspended biometric attendances in offices to curb the spread. (Agarwal , 2020)
5. In Kerala, all schools and colleges across the state will remain closed till 31st March. (Onmanorama, 2020)
6. A birthday party of a kid which was supposed to happen at a Domino’s outlet got cancelled. This is a direct blow to domino’s sale as a birthday hosted at a store is a bulk sale without delivery-related costs.
7. Many Tech events like the Google I/O Developer Conference, Mobile World Congress 2020 all have been postponed. These are important events for the Tech industry which could have revealed new innovations. (Chakravarti, 2020)
The economic fallout could include recessions in the U.S., euro-area and Japan, and most obviously in China.
Till now, a total of $2.7 trillion has been lost in terms of output—which is equivalent to the entire GDP of the U.K.
Bloomberg Economics has further reduced the global GDP growth rate, which is the weakest on record. They even state that these forecasts might actually prove to be optimistic. (Orlik, Jamie Rush, Cousin, & Ho, 2020)
Bloomberg Economics has come up with 4 possible scenarios:
Scenario 1 – Major blow to China with spillover to the rest of the world
If China can control the spread and stand-up by the start of next quarter. Then, the global economic impact will be contained. (Orlik, Jamie Rush, Cousin, & Ho, 2020)
Scenario 2 – Outbreak causes localized disruption
If controlling it is not as swift as expected in the 1st scenario, then China will face deeper drops in productivity. However, the global economy will face a gentle push. (Orlik, Jamie Rush, Cousin, & Ho, 2020)
Scenario 3 – Widespread contagion
In this case, South Korea, Italy, Japan together with China will face severe difficulties. Countries with a lower number of cases like U.S, India, U.K, Brazil & Canada will fight to curb the spread. (Orlik, Jamie Rush, Cousin, & Ho, 2020)
Scenario 4 – Global Pandemic
In this case, all the above-mentioned economies face a severe shock. Global productivity will shatter in such a case. (Orlik, Jamie Rush, Cousin, & Ho, 2020)
The entire report can be viewed by clicking here.
Impact From the Previous Pandemic
Influenza Pandemic (1918) is fundamentally different from coronavirus, but the economic impact from both these pandemics can be similar if countries are not able to contain the spread of coronavirus.
Here are 3 facts regarding the economic impact of Influenza Pandemic:
1. The Influenza pandemic killed nearly 40 million people worldwide from the spring of 1918 to the spring of 1919. (Garrett , 2007)
2. In the United States, almost 0.8% of the population was wiped out. The rough cost of this pandemic was 1.5% of GDP in the US economy. (Garrett , 2007)
3. A person’s health has a direct relation with their productivity and thus their income. In 1918, wages of men were 5-9% lower because of the infection. (Garrett , 2007)
5 Steps Taken by the Indian Govt.
1. All Indian are advised to refrain from travelling to China.
2. Existing Visas of any Foreign National travelling from China are no longer valid.
3. All Biometric attendance systems are suspended.
4. Awareness Materials are being distributed.
5. A helpline has been dedicated to report and manage any potential or actual coronavirus case.
The Helpline Number for coronavirus: +91-11-23978046
The Helpline Email ID for coronavirus: email@example.com
The Ministry of Health and Family Welfare Website: https://www.mohfw.gov.in/
The Chinese economy has been brought down to its knees by the Coronavirus. However, the situation in the rest of the world is not so dire. The fatality rate outside mainland China is almost half of the fatality rate witnessed in China, where it all began.
Moreover, the number of cases in China is almost 4 times the numbers outside China. Globally, there is still hope that the spread will be contained and controlled, without severely damaging the global productivity projections.
Ryan, P. (2020, March 10). Investors in shock as stock market suffers worst day since GFC. Retrieved from ABC: https://www.abc.net.au/radio/programs/am/investors-in-shock-as-stock-market-suffers-worst-day-since-gfc/12041120
Reuters Graphics. (2020, March 7). Tracking the spread of the novel coronavirus. Retrieved from Reuters Graphics: https://graphics.reuters.com/CHINA-HEALTH-MAP/0100B59S39E/index.html
Agarwal , N. (2020, March 5 ). Coronavirus scare: All primary schools in Delhi to remain shut this month . Retrieved from LiveMint : https://www.livemint.com/news/india/coronavirus-scare-all-schools-in-delhi-to-remain-shut-this-month-11583405219640.html
Jat , A. (2020, March ). Coronavirus impact: Delhi shooting World Cup postponed, Olympic test event cancelled. Retrieved from India Today: https://www.indiatoday.in/sports/other-sports/story/coronavirus-impact-delhi-shooting-word-cup-postponed-1653117-2020-03-06
Onmanorama. (2020, March 10). Coronavirus: Near shutdown in Kerala; schools closed; class 10, 12 exams on schedule. Retrieved from Onmanorama: https://english.manoramaonline.com/news/kerala/2020/03/10/coronavirus-holiday-for-upto-class-7-kerala.html
Chakravarti, A. (2020, March 4). Coronavirus impact: Here’s the list of tech events that were cancelled . Retrieved from India Today: https://www.indiatoday.in/technology/news/story/coronavirus-impact-here-s-the-list-of-tech-events-that-were-cancelled-1652430-2020-03-04
Orlik, T., Jamie Rush, J., Cousin, M., & Ho, J. (2020, March 6). Bloomberg . Retrieved from Coronavirus Could Cost the Global Economy $2.7 Trillion. Here’s How : https://www.bloomberg.com/graphics/2020-coronavirus-pandemic-global-economic-risk/
Garrett , T. A. (2007, November). Economic Effects of the 1918 Influenza Pandemic. Retrieved from Federal Reserve Bank of St.Louis: https://www.google.com/url?q=https://www.stlouisfed.org/~/media/files/pdfs/community-development/research-reports/pandemic_flu_report.pdf&sa=U&ved=2ahUKEwiXjtLb7ZHoAhVa7nMBHX1qDkMQFjACegQIBhAB&usg=AOvVaw2DuLe3pJnMWJTwxfDkVCzW