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  • Writer's pictureShirish Khaire

Corona Virus Pandemic and Global Economy

Updated: Aug 3, 2020

The coronavirus outbreak has infected more than 999,798 people and put the global economy in lockdown mode. Let's try to analyse how this health emergency will leave its impact worldwide.

As per the WHO to avoid panick among some population (especially in Asia) they refer the virus as COVID-19 instead of SARS

Novel Coronavirus and its spread

After the first case of the corona was registered in Wuhan, China today it has spread to almost 204 countries. The USA, China, Italy and Spain are the worst affected.

The critical situation of America

America is called a global economic leader for a reason and with more than 5,780 fatalities and 236,221 cases in the US (as of April 02) its a matter of growing concern. If not avoided this situation could have been handled with much more precaution to minimize the damage done, well that's a topic of discussion for another post.

Dr Anthony Fauci, a key member of White house 's coronavirus task force has told CNN that the United States could see 100,000 - 200,000 deaths and millions of cases of infected people. To which Trump has extended the lockdown as a precautionary measure.

Impact on the Global Economy

Indices like DOW 30, Nasdaq, Nikkei 225, FTSE 100 and Nifty 50 have shown huge corrections.
Indices like DOW 30, Nasdaq, Nikkei 225, FTSE 100 and Nifty 50 have shown huge corrections.

Stock Markets

Stock markets are the reflection of any on-going economic event. thought this is more of a health emergency but over time we have seen how it has now become

Big Guys like Microsoft, Apple, Visa all have taken hits. In markets like this, no fundamentals or technical indicators work as they are purely run on external factors in this situation it is the coronavirus. If positive news related to the coronavirus comes the market will show upward movement and vice- versa.

Trading is one thing but if the firms are not being operative there is no revenue generation and hence that will impact on the macroeconomic level.

now the US lockdown has just been extended to June.

UNCTAD analysis of COVID-19's economic impact suggests that of global foreign direct investment FDI in Multinational Enterprises(MNE's)will be reduced by 30-40% during 2020-2021.

Travel Industry

The statistics from flightradar24how coronavirus has international flights were shut down later even the airline companies were forced to cancel all the domestic operations and cancel the booked tickets

Oil prices

Sharp fall in the oil prices is the result of strategic price war started by Russia when the situations were normal (will be discussed in detail in the upcoming article). With this pandemic, the equations have changed far too much and Oil prices have hit 18year low and with no signs of stopping. The demand of oil is expected to slow down as a result of the crisis.

Auto sector

Share prices of auto companies are now a falling comet. With may, production units shut down and the current situation it is likely that people won't be making new bookings any time soon. Also, falling oil prices would decrease the demand for electric cars.

Supermarkets and Pharma Companies

Supermarkets have reported growth in consumer demands as a result of people stocking up their home with toilet paper, food grains and orange juice.

As the fear mounts the pharma companies are expected to earn big profits.

It can be confirmed once they have developed the vaccine to cure the virus-infected people.

Measures Undertaken

Measures to boost the economy the central banks in many countries even the fed have reduced their interest rates to promote borrowing. Theoretically, when there is a rate cut it promotes borrowing to boost the spending habit of masses.

Usually rate cut is a good sign but in times like this, it's the natural instinct of the people to reduce the spending so it would most likely tank.

Australia and Israel have begun testing the vaccine and America is stockpiling

anti-malarial drugs Chloroquine and hydroxychloroquine followed by Nigeria.

I would like to quote President of Ghana Adufo Addo who said, “We [government] know how to bring the economy back to life. What we do not know is how to bring people back to life,”. So, President Trump has a lesson to learn as he is still giving priority to business over life saying the regions which are less affected need no lockdown.


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