COVID-19 Affecting Economy In Alarming Ways

The World is fighting a war right now with Covid-19. The war that is open from two fronts, first: The downfall of the global economy and second: Protecting public health. And history has shown that if you don’t fight the war strategically that has been open from two fronts you will lose very heavily. Let us see and talk about the first front that has been open by Covid-19. The downfall of the economy and how it is affecting the growth of the economy.

The sword of economic downfall has been around the neck of every country for a while now and it was inevitable that the world is going to face a serious downfall and will fall into recession. But coronavirus had brought that fall 2 years early and the world, more importantly, the economy was not ready for this. 

COVID-19 Impacting on Economy In 4 Major Ways

Covid-19 has hit the global economy very hard, let us see how this virus has had an impact on the global economy. It has affected the global economy through the following channels.

1.Direct Impact on Production

Major supplier of the raw materials or products to the whole world is china. And there is no surprise that China was the first country to take the hit of the virus. Because of which the lockdown followed and hence, production has to stop. Countries like India, USA, European nations, etc. who are dependent on this one country got affected.

The slowdown in China has effects on exporters to China. China’s largest sources of importers are Korea, Jpan, and other Asian countries, according to the World Bank. Even after new outbreaks of the disease, there will be likely to experience slow growth in the second half of 2020.

  1. Impact on Supply chain

Many Manufacturing firms rely on imported goods and raw materials and immediate input from China and other countries. Many companies are also dependent on sales in China to meet financial goals. The slowdown in economic activity and transportation restriction in affected countries will have an impact on production and profitability for specific global companies. 

The impact on the supply chain had affected many industries. Industries that work on the supply chain. Such has,

  • Travel and Tourism Industries
  • Automobile Industries
  • Transportation Industries

 

  1. Financial Impact on firms and Market

There is a disruption of inputs and production which has stressed out some firms, particularly those firms with inadequate liquidity. Traders in the financial market cannot correctly anticipate and understand which firm is vulnerable. The rise in risk has revealed that the key financial market players have taken an unprofitable investment position. There is no trust in the financial market as of now. All these uncertainties are created by the pandemic. 

 

  1. Change in Consumer Behaviour 

The consumer is the weakest link in this scenario. Just Because has to suffer more in this situation. The buying process of goods has changed, the people who buy food from the markets are ordering from online. Because there is a decline in consumer income there is a decline in the spending and hence lower demand and lower supply of goods. 

The basic structure of economics is disturbed in this pandemic.

These were the general views on how the global economy has been affected by Covid-19. But what is happening in the home ground, what are the shifts happening in the Indian economy? Let us have a look.

How Covid-19 had impacted The Indian economy.

Recently an industry survey that is jointly conducted by industry body FICCI and Tax consultancy Druva advisor took the response from 308 industries across the country. According to the survey, Covid-19 is having a deep impact on Indian Businesses, over the coming month’s jobs are at high risk because firms are looking for some reduction in manpower. Further, it is added that the already COVID-19 crisis has caused an unprecedented collapse in economic activities over the last few weeks.

There is some Industries sector that had a huge impact because of this COVID-19. Sectors such as,

  • Chemical Industries
  • Shipping Industry
  • Auto Industry 
  • Pharmaceutical Industry 
  • Textile Industry 
  • Solar power Sector
  • Electronic Industries
  • IT Industry 
  • Tourism and aviation industry

These are the Industries that Indian economy thrives on and these are the industries that had a big hit by COVID-19. 

This Virus has impacted the sports industries also. Industries which brings lots of money into the state. But the government has to shut down the sports activity all around the world, sports like.

  • IPL Matches
  • NBA Tournament
  • Olympics 2020
  • F1 Race
  • Football Tournaments 
  • Tennis Tournaments 

 

The outbreak of COVID-19 impacted the whole world and has been felt across Industries. The outbreak is declared as a national emergency by the World Health Organisation. In India three major contributors to GDP namely private consumption, investment and external trade are getting affected. But as our ancestors have said “ This Time too, Shall Pass”

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