With the emergence of more new COVID19 cases on daily basis and lockdown procedures being followed among most of the nations, Global Economy is bound to take a hit. Though the world is trying it’s best to put a break on the speed with which SARS-CoV2 is spreading, the spike in number of deaths illustrate the ineffectiveness of the measures being adopted to contain this virus.
The Post-Pandemic world would be staring at number of issues to address as this virus has rattled the lives of individuals and people would find it strenuous to return to the lifestyle that they used to live.
While most of the countries are now in isolation, the industrial sector is in a state of crisis. Auto industry facing shortage of auto-parts, automation from paucity of electrical equipment, the Oil kings loaded with oversupply of oil. In this interconnected world scenario, a crisis like that of COVID19 ripples across continents affecting every sector and subsector of the industry. As most of the industries source essential components from China, they are now finding it hard to fill the void. There will be a sense of hesitation among the nations who used to import raw materials and equipment from China. Recently, Japan offering $2.2 Bn to the companies to shift out of China says a lot about the distrust that has evolved for China among the partner countries.
Lesser demand and low production levels will eventually lead to job cuts specifically in the production sector. People have starting losing jobs world over with over 6.6 Million Americans filing for Unemployment benefits this Corona season. Multi National Companies with branches all over the World would find it hard to retain employees. A Federal Reserve official has said that unemployment rate could hit 30 percent, worst since 2008-2009 Great Recession.
On the top of that, lesser production means no need for loans which in turn hits the Banking sector thereby impeding the credit creation. With almost nothing on the Asset side, Bank balance sheets would take a dive. For the already in-bad shape banking sector, the economic impact of this virus will come as a double whammy. Surely, the close down of businesses will impact the payment of EMI’s and in turn the interest receipts for the banks. NO Business No Income No EMI No Interest. Moreover, due to the fact that people are living off their savings now, bank deposits are bound to deplete. NPA or Non Performing Assets are bound to increase. The declining business graph all over the world leading to low income and shutting down businesses eventually resulting in non payment of interest and EMI’s.
The IMF has already warned of the ugliest recession since the Great Depression. The widespread lockdowns, quarantines and healthcare crisis has impacted the economy severely. Even after the lifting of lockdown, there are chances of second COVID-19 wave, therefore, economic recovery post lockdown is also uncertain.
Thousands of homeless people round the globe and migrant workers particularly in India is facing Hunger crisis and are helpless. Though the Government is making all out efforts to provide food to them, most of them are compelled to stand in never ending queues for food eventually securing substantially less amount of food. Some of them stand in queues from afternoon to be able to procure some food for the dinner. Since the lockdown is extended and number of COVID-19 cases is rising, this pandemic is far from stopping. Post corona period will prove to be kick in the teeth for those homeless people and migrant workers.
This pandemic has several aftershocks to offer post lockdown. The world would be less open and not so free with a shipload of issues to address.
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