Are you ready for the post-Corona crisis? Understanding the dynamics of the seemingly economic crisis.

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Analysis COVID-19 and economic crisis-NewsORB360

World Economic Forum in a report published on 18th May 2020 indicated the aftermath of the Covid-19 pandemic and the imposition of economic restrictions as its result. Similar reports by the International Monetary Fund also indicated that the global economy may shrink by 3 percent in the financial year 2020-21 which could be the steepest slowdown since the Great Depression of the 1930s.

During the 2009 financial crisis, the GDP of all the economies collectively fell by -0.1% although most of the developing nations were continuously growing recording almost quite insignificant changes. Contrary to this, the crisis this time is more acute with almost around 70% global GDP moving into recession in terms of purchasing power parity. The supply-side is also expected to take a hit as the output in developed economies is forecasted to constrain by 6.1% in 2020.

The impact of the Covid-19 has started impacting the economies worldwide.

China’s GDP dropped by 36.6 percent in the first quarter of 2020. In Europe, the GDPs of France, Spain, and Italy fell by 21.3, 19.2, and 17.5 percent respectively.

Analysis COVID-19 and economic crisis-NewsORB360

The oil industry also recorded new lows at an unprecedented scale. Oil prices fell primarily as the transportation section, which accounts for 60 percent of the oil demand, was hit due to several countries imposing lockdowns. A buzz was created globally when the price of oil barrel turned negative falling to -37$ to the end of April 2020.

The way ahead Economies worldwide has started undertaking measures to recover from the financial crisis they have plunged into as a result of a halt in economic activities globally.

The WEF has assessed that the most crucial measure in recovery measures concerns the extension of support to SMEs as they play a key role in providing employment and maintaining a stable economic system for any country.

Analysis COVID-19 and economic crisis-NewsORB360

Economies worldwide has rolled out bailout packages to safeguard the interest of the economic agents. The stimulus package announced by the Indian government is 10 percent of its GDP, Japan’s is 21.1 percent, followed by the US (13 percent), Sweden (12 percent), Germany (10.7 percent), France (9.3 percent), Spain (7.3 percent) and Italy (5.7 percent).

However, WEF expressing his concerns noted, “…there is concern that the size of packages may prove insufficient for the duration of the crisis; that disbursement may be slower than is needed; that not all firms in need would be targeted; and that such programs may be overly reliant on debt financing.”

Economies have worldwide have recently started resuming economic activities with some restrictions to support the collapsing economies. But as economic activity moves to normalcy, the market conditions may take time to stabilise, “as consumer behaviours change as a result of continued social distancing and uncertainty about how the pandemic will evolve.”

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