Pandemic in the times of a global economic downturn
Student of MA in Defence and National Security Studies from Panjab University. Areas of expertise- Defence, Strategic Issues and International Relations.
With the dawn of a new decade, the world was staring at an unprecedented crisis that would spell doom in the weeks to come. In a world that had been going back to narrow nationalism and evading the concept of shared interests,
Covid19 was a tragedy waiting to happen. The Coronavirus, member of the SARS family that started in Wuhan city of Hubei province in China took shape of a global pandemic that has brought the entire world to a virtual halt. Even though the cases started pouring in since mid-December in China, it was much
later that the Communist regime woke up to take adequate measures and enforce a lockdown. For many days, while China grappled to contain the virus, the world remained ignorant to the potential of the virus to spread beyond political borders and take shape of a pandemic. It was much later in the last
week of February, when the virus travelled to the western world that it was declared a global emergency. What followed was a disaster that continues to cost lives and tear down economies by sabotaging global supply chains.
Going by data, there have been 13,071 fatalities out of the 311,894 cases reported worldwide. The virus which earlier had Wuhan as its epicentre has now shifted to Europe with Italy and Spain being the worst affected, reporting maximum casualties outside China. The virus has spiralled out of control by
causing unprecedented damage in world powers that have failed to contain a virus as contagious as this one. From United States to Iran, from Japan to South Korea, from the South-East Asia to South Asia, Coronavirus has sent the entire world into a tizzy. Clearly, the world wasn’t ready for a public health
emergency of this scale and the humongous economic consequences that it would entail.
The already receding global economy has been hit due to disruption in the global supply chains. Economies have effectively shut down with commercial sectors such as aviation, tourism, communication and IT sectors worst hit. Investors have started pulling out of market in fear of a global recession and
stock markets have plummeted all over the world. Crude oil has become cheap giving respite to the oil importing nations like India but has hit the oil-producing West Asian region like a wrecking ball. After the United States cut interest rates, the central banks around the globe have been forced to cut interest rates to ensure liquidity. The world is staring at a very huge
economic crisis that is unfolding one day at a time. It started with the lockdown enforced in China with factories and commercial hubs like Shanghai shutting down and has effectively crossed transnational borders. Employees
have been asked to self-quarantine across the world, transportation has been suspended and borders have been sealed, thus bringing trade to a halt. The health care system across the world is overburdened and the revenue receipts
have seen a pitfall. The productivity over the world has gone down exponentially.
In India, the virus is still in the second stage and has not assumed the stage of community transmission with recorded cases pegged at 360 by the Health department. However, the already distressed economy has felt the heat of a potential spread with Foreign Portfolio Investors withdrawing more than 6000 crores from the Indian market. Sensex and Nifty have nosedived and private investment has vanished. The cinema halls, hospitality sector, malls and gyms have been shut along with educational institutions. The biggest generator of revenue for the Indian economy, the Indian Railways has suspended about 80 trains and restricted travel. The fiscal deficit is set to widen and the economy is predicted to grow at an even dismal rate.
The economic downturn of this scale is being witnessed for the first time since 2008. The countries must make dramatic efforts to arrest the economic downturn but most of all, head of states must ensure that enough liquidity is ensured so that there is no panic among the citizenry and enough financial packages are earmarked to contain the virus. United States is a case in point given that it has sanctioned $850 billion to stop the spread of
virus. Countries like Singapore have paid $100 per day to self employed people to ensure that they self-quarantine. Alacrity in ensuring abundant financial resources are attributed to health care and emergencies goes a long way.
This opportunity should also be used by nation states to evaluate their relationships. Trade wars must be suspended, protectionism should be kept behind and multilateralism must be promoted to deal with the crisis emanating out of the Coronavirus. Conspiracy theories and political blame games must be put to rest immediately. Damages must be assessed and nations must come together in combating them. Indian Prime Minister holding a video conference with the head of states of the SAARC nations is a step forward towards collective security against a common enemy and must be adopted the world
The effect of this pandemic will be felt for a long time. The global economy will take a lot of time to recover from Recession, Employees will be laid off from MNCs in huge numbers, agencies will be forced to shut shop, the healthcare system will feel the heat for a very long time and a new debate will be sparked
off about the need to allocate more to social spending and security. Some might take the protectionist route and erect walls. However, it is time for the world to rethink its policy and be prepared in the face of another global disaster.