Covid-19: An economic disaster
The economic and labour crisis created by Covid-9 pandemic has brought almost all economies to knees. The pandemic has changed the global economic landscape on larger scale. The coronavirus economic freeze has cost jobs of millions of medium and small-scale workers around the globe.
For instance, in order to contain Covid-19, Government of India announced three-week nationwide lockdown which has disproportionately hit marginalized communities who are facing loss of livelihoods, food, shelter, medical facilities and other basic needs. No other option left, the lockdown is equally disastrous for the middle and lower-income groups. And then there is the general sense of insecurity, which is causing greater harm. That is why experts urge India Inc. to avoid layoffs, rather adopt a humane approach. Unnecessary expenses, pay cuts, freezing hikes, and like would lessen job cuts.
The preliminary assessment note –“COVID-19 and the world of work: Impacts and responses” calls for urgent, large-scale and coordinated measures across three pillars — protecting workers in the workplace, stimulating the economy and employment, and supporting jobs and incomes.
Almost one-third of world’s population is now under lockdown. According to Federal Reserve estimates, millions of Americans have lost their jobs due to crisis and worst of damage is yet to come. Peeling off the layers to reveal, Covid-19 had induced much havoc already, but the economic disaster it may bring post-pandemic period would leave long lasting impressions on all economies of world as it happened post 2008-09 global financial crisis.
International Labor Organization (ILO) warns around 25 million layoffs if the virus isn’t controlled. It has called Covid-19 crisis deepest recession since Great Depression— the worst economic downturn for industrial world, from 1929 to 1939.
In case of low scenario, projected 5.3 million job losses and in higher scenario, it would be 24.7 million, from base level of 188 million in 2019. Some economists project more horrible figures and estimate 47 million reduction in employment. So, global economy would go into recession with a forecasted loss of trillions of dollars. However, ILO has made it clear that “if an internationally coordinated policy response would happen, as happened in the global financial crisis of 2008-09, then the impact on global unemployment could be significantly lower”.
At least for two consecutive quarters, the world economy while have to struggle vary hard because the havoc caused by pandemic has disrupted both demand and supply chain. Meanwhile, global rating agency Morgan Stanley expects 2.3 percent slump in world economy in first half of 2020, but it would recover in third and fourth quarter of the year. There is a hope, the world economy that is paused now, may return to the pre-Covid-19 status quo in fourth quarter.
Meanwhile, the analysis by United Nations Department of Economic and Social Affairs (UNDESA) has predicted a shrink of 1 percent global economy in 2020, a further contract is expected. The analysis by UNDESA has also warned prolonged economic restriction would affect developed countries adversely and will son spill over to developing countries.
Post pandemic era would be an era of political, economic struggle. Some economists believe that the post pandemic world will change the way of global supply chain, and shift manufacturing and production out of China, thus arising new opportunities for India. In my opinion, the way China contained pandemic earlier than its rivals would provide China sufficient time to reestablish its market.
Keyu Jin, associate professor of economics at London School of Economics, in an interview with CNBC said, “the coronavirus crisis could be opportunity of century for China to cement its place as a global power.”
In her opinion, China had seized earlier opportunities to elevate its position to rebuild its international image. Therefore, China wouldn’t let this one go waste. “This is the chance they are looking for and European debt market would support China,” she added.
The post pandemics would be a struggle between unemployment and opportunity. India on one hand would lay much emphasis on job security, while on other it would like to seize the opportunity to supersede China in the global market. The politics of economy reveal that the virus is not only a global health crisis, it is also a large economic crisis.