COVID-19 (Coronavirus Disease 2019) was first identified in Wuhan city of China in December 2019. Till now (27th February 2020) approximately 2750 people were died due to this virus and nearly 80,000 people were affected by it.
This virus has spread to nearly 50 other countries.
On 30th January, the World Health Organization (WHO) declared COVID19 as a Public Health Emergency of International concern.
Coronaviruses (CoV) are a group of viruses that affects animals and humans. The first coronavirus that can affect humans is discovered in the 1960s. Before COVID-19, these family of viruses caused the SARS outbreak in China in 2002, the MERS outbreak in Saudi Arabia in 2012.
COVID-19 is not just affecting the health of the people, but also economies of many countries. So the topic – ‘Impact of COVID-19 on Global economy‘ is widely discussed.
Impact of COVID-19 on the Global economy:-
According to the World Trade Organisation (WTO), China is the biggest exporter and second-biggest importer of merchandise as of 2019. Many industries in other countries are depending on China for many raw goods such as pharmaceutical ingredients, automobile components etc. So, coronavirus has hit global supply chains badly. As many factories in China are closed now, production has halted for the dependent companies in other countries. Some companies are looking for alternatives, which will be the costlier option.
Due to the consumption slowdown in China, exports to the country have declined. So, this affects the economies of the countries that export goods to China.
Movement of people is restricted due to the fears over the spread of COVID-19, and hence tourism industry is facing huge losses. Tourists spend money in the countries they visit, so the loss of this money is affecting the economies of many countries.
Due to low demand in China, crude oil prices have dropped. Low crude oil prices are beneficial to oil-importing countries like India and detrimental to the economies of OPEC (Organization of petroleum exporting countries) countries like Saudi Arabia.
Meat market got hit badly due to fears over COVID-19. Rumours have spread saying that coronavirus spreads through the meat. Some meat companies and organization are trying hard to debunk the rumours.
Air travel demand is declined, and hence the aviation industry is negatively affected.
Outbreak preparedness and response are costing a lot of money for the countries. This unexpected expenditure on virus prevention and control is affecting many countries such as Japan negatively.
China is the second-largest economy in the world constituting to 16.3% of the world GDP. China is just recovering from the US-China trade war. And now as many people of working age are sick, they are not working and earning. Due to the nature of the coronavirus, factories and companies are closed in China to prevent further spread. This is causing immense economic losses to China and the dependent economies, which is a severe threat to the global economy.
Impact of COVID-19 on Indian economy:-
14% of India’s imports are from China. Indian industries depend on China for electronics, automobile components, pharmaceutical ingredients etc. So, India is one of the most affected countries due to the coronavirus outbreak in China.
Automobile industry in India is already in a crisis due to the economic slowdown. And now the production is suffering due to the disruption of supply chains.
The only positive thing for India is decreased crude oil prices.
Meat market in India has also negatively affected.
Preventing and preparing to tackle the possible spread of coronavirus within the country is a burden on the Indian economy, especially at the time of economic slowdown.
As of now the economic damage COVID-19 caused is manageable, but with time the damage will increase. Hope the vaccine is developed soon to prevent further loss of lives and also the collapse of economies.