With the novel coronavirus spreading like wildfire across the globe, and with 13,582 deaths so far, it has ignited a worldwide crisis in just a matter of few months. In the initial stages, this deadly virus remained confined to Mainland China. But over time,people all over the world were affected and it escalated to a whole new level. The microscopic virus has toppled the world unimaginably, to an extent where the World Health Organization has declared it as a pandemic.
With no known treatment available presently, many countries have imposed a lockdown or curfews to contain the spread of the virus, thus impacting the global economy. This pandemic has led to a radical drop in the demand and supply in the markets. Well, the main question here is, how did this virus originate and from where? And how has it affected the global economy in the past few months? What is its impact on India? How is India responding to this crisis? What are the major downfalls that the spread in this pathogen has caused? We shall answer all these questions here in detail. So, let’s begin.
From where did the coronavirus originate?
This particular question is debatable because of a lot of theories making rounds. However, reports said that bats have transmitted it. Major diseases like Ebola, Nipah are considered to have caused by these mammals. This coronavirus probably belongs to the same category. So now, from where did these bats come? Well, there is a wet market in Wuhan in China, where dead, as well as live animals, were sold. It is said that these animals carry the pathogen, which in turn may have transmitted from animal to another animal and then to humans. So the bats in the market are said to have caused the outbreak.
Since this virus is novel, people were unaware of it when they had mild symptoms of cold and cough. Assuming it is similar to any other influenza, people took regular treatments initially. However, the spread of the virus was so rapid that in no time, a majority of people started falling sick. From China, it started immediately affecting all the countries as people were continually traveling. An eye-opening event was the deaths caused due to this virus. That is when it was considered deadly, and with numerous deaths to date, the countries are taking stringent measures to restrain the spread. While it is protecting its people, the global economy is gradually sinking.
How has it crumbled various economies?
Due to the severity of the disease, several countries have banned flights to prevent the spread from infected people traveling to places and further infecting others. This ban has hit the oil industry, the tourism industry, and the aviation industry. Productions have stopped due to social distancing. They strictly instructed people to stay at home and avoid going out or even for work. Now, due to this, the businesses have come to a standstill. Since people cannot purchase goods as well, buying and selling pattern has come to a halt.
China is the world’s biggest exporter of goods. Its major exports are electronic items, clothing, machinery, toys, and much more. Now if they freeze productions in China, it will discontinue export and imports, and other countries will suffer as the supply will stop and people will stop purchasing. It is a cycle. From the manufacturer to the consumer, it affects everyone. Which, in turn, leads to a decline in the country’s growth. Which also means, there is unemployment, and hence no income.
Italy is the next major hit after China, but China’s number of deaths could not surpass Italy’s. The virus is spreading at an exponential rate in Italy and infecting thousands of people every consecutive day. While it has not yet recovered from the European Debt Crisis, this outbreak is costing Italy excessively. With all the operations, shops, schools, companies completely shut, Italy’s economy is collapsing to an extent where it might have to seek help from other countries. If it had taken the right measure during the initial spread of the virus, this wouldn’t have been the case.
Before the outbreak, the US was doing well economically. But as soon as the virus inched to the US, flights and businesses came to a standstill. The US economy is gradually deteriorating, but it is doing well in comparison with the rest of the countries. But it has led to a high unemployment rate and affected retail sales too. Experts predicted that the US GDP might drop to 5-10% in the next three months. It all depends on the way the government handles the situation to contain the virus. If the virus spreads awfully, it will slow down the economy.
By all the unforeseen events that are occurring, the outbreak is termed as a black swan event. The economy was going great until this epidemic surfaced. This disrupts the supply chains, and the capital markets were in for a surprise due to the extremity of the events all at such short notice. A black swan event is when an event arrives at a lighting fast rate and completely disrupts not only to a small area but the entire world. The coronavirus outbreak began the same way.
Not only did it affect us,it affected the whole world due to quarantines, lockdowns, and curfews, ban in concerts, air travel, wedding events, sporting events, and all public gatherings . The world functions as long as people are buying and selling goods and services. So,when stopped it will affect every single person, every business, every country . This whole process has ultimately crumbled the economy of the world.
Impact on India
Though the virus in India surfaced gradually,China’s lockdown negatively influenced the Indian economy because India was China’s major importer of electronics and merchandise. This hit the electronic industry in India to a large extent. It largely stirred the export to major countries and a huge percentage of imports from China and other countries. Now with the number of infected cases rising with each passing day in India, many of the Indian states have initiated a lockdown. The government sealed India and China borders as well. This shut businesses , banned travel. This disrupted supply chains and investor confidence in India. Now since Europe is under lockdown, exports from Europe to India has crashed. The textiles, electronics, chemicals, apparel, automobile, and aviation industry are largely impacting the Indian economy.
The total confirmed cases in India are 396, and the government is taking serious action to stop the sufferings. There is a slump in the cashflows worldwide. Indian yearly trade is 90 billion dollars with China. But this has led to closing of trades since all the factories and productions shut in China and Covid-19 has severely affected India lately. Before the pandemic, India’s economy was growing at a snail pace as low as 4.7%. But with the rise in the number of cases, the trend in the graph is declining further. This intensely affects the daily wage workers. The unemployment rate is high. It forbids public gatherings, which means no going to theatres, no attending weddings, and no traveling. The film industry, the hospitality industry, the retail sector, and the tourism industry, nearly every area has come to a standstill. The stock markets NSE and BSE crashed largely in a single day. Volatility in the financial markets is likely to prevail if the virus continues to infect more people.
Effect on GDP
The temporary setback on the economy is currently the Corona virus. If it continues, it might lead to a financial crisis. It will take a long time to recover if that happens. With lakhs of unemployed people, it will take a longer time for productions to return to normal.
The GDP of China has assumably dropped to as low as 2.4%, and that is a worst-case scenario. China is the second-largest economy in the world contributing around 9.3% to the global GDP, and if it hits so low, the overall world GDP will deteriorate to a large extent. Now, with the coronavirus affecting 189 countries worldwide, you can imagine the effect on the global economy. It will hit the lowest since 1990. China has taken stringent measures to stop the virus from spreading further in its cities and thus has seen a reduction in the number of positive cases from the past few days. But the virus is rapidly affecting outside China building serious concern, and the governments should act fast to contain the spread of the virus.
With the hope that this outbreak will end soon, it is in the hands of the public to act responsibly and restrict the spread by not gathering in large numbers in public and follow the government’s order. However, it is still a distant dream to see the world bounce back to functioning the way it was before the pandemic.