World Health Organization (WHO) has declared coronavirus (COVID-19) a ‘pandemic’ as it has spread in more than 170 countries and it is affecting every sector and individuals.
People are afraid, as the market getting panicky and experts expecting that in the absence of any vaccine available so far to cure this disease, it will continue to create havoc for months to come.
Global stock markets are becoming very volatile indicating an impending crash with a threat of a deep global recession. Almost all Asian stock markets are down. Indian stock market has fallen by more than 3,000 points in last one week. Panic is spreading among short term investors in India. Most of the investors are trying to sell their shares but no buyer for them. It is becoming a bearish market. Additionally, oil prices are down. Therefore, it is clearly a trend moving towards economic recession.
It will add further panic among people because this epidemic is not just destroying demand from the economy but also it is affecting supply. So, supply-chain disruptions are increasing very fast. It is claimed that the epidemic has already created severe shortages of consumer good, drugs and medicines and medical equipment etc.
There is a high possibility of a liquidity crunch in the world market in which case cash-strapped consumers will not buy properties, other automobile and electronic products. Airlines are expected to experience a drop in their revenues of $113 billion in 2020. The recession may cause a severe drop in asset prices around the world as earnings projections are going to fall.
Additionally, because of the severe disruptions caused by coronavirus, various business stalwarts, economists and others fear that there may be 25 million jobs loss in next 12 months on a global level. The worst affected industries would be airlines, hotels, restaurants, bars, retail, consumer, automobile, construction, sports, offshore and mobile payments industries.
It is claimed that due to this unprecedented health crisis, businesses are disrupted in the tourism industry very badly, employment will freeze which means hiring is likely to come to a halt. Most of the economies of the world may experience only 3-4 percent growth in GDP. World poverty level will further increase. Coronavirus health crisis may even unsettle governments in few countries. These will be the main negative economic impact of COVID-19 pandemic.
Chinese government claims that the virus is now under control as the number of death cases are reduced and new cases identified are slow down. Workers have started going to work, and closed factories and other enterprises are now back to business. However, confronting this rising threat will not be easy for weak economies and even for India.
World leaders including from India should meet urgently to find practical and immediate solutions to overcome the current rising crises. World health, research and development organizations should accelerate research and innovation for the new coronavirus and develop vaccine for its cure.