How can a sore throat change the world as we know it
Coronaviruses (CoV) are a large family of viruses that cause illness ranging from the common cold to more severe diseases such as Middle East Respiratory Syndrome (MERS-CoV) and Severe Acute Respiratory Syndrome (SARS-CoV). Coronaviruses are zoonotic, meaning they are transmitted between animals and people. Detailed investigations found that SARS-CoV was transmitted from civet cats to humans and MERS-CoV from dromedary camels to humans. Several known coronaviruses are circulating in animals that have not yet infected humans
Covid 19 or novel coronavirus (nCoV) is a new strain that has not been previously identified in humans. Common signs of infection include respiratory symptoms, fever, cough, shortness of breath and breathing difficulties. In more severe cases, infection can cause pneumonia, severe acute respiratory syndrome, kidney failure and even death.
The new coronavirus – Covid-19 – was first identified in Wuhan, China in December 2019. The global outbreak of Covid-19 is still ongoing. The noval Coronavirus has affected more than 1,00,000 people all over the world and has resulted in more than 4000 deaths. The World Health Organization (WHO) has declared the coronavirus outbreak 2019–20 a Public Health Emergency of International Concern (PHEIC).
In this article, we will mainly focus on the economic, social and political impact of COVID-19.
The economic impact of Covid-19 on the world economy and the Indian economy:
The novel coronavirus outbreak has brought a large part of the world’s second-largest economy China to a standstill and its impact has been felt across industries. On January 30, the World Health Organization (WHO) declared the coronavirus (COVID-19) outbreak a global health emergency. The impact on India is felt through supply chain disruptions from China as well as regional players, who in turn are net importers from China.
Estimates published by United Nations Conference on Trade and Development (UNCTAD) on Wednesday said that the slowdown of manufacturing in China due to the coronavirus (COVID-19) outbreak is disrupting world trade and could result in a 50 billion dollar decrease in exports across global value chains.
As we write this article, the most affected sectors include precision instruments, machinery, automotive and communication equipment. Among the most affected economies are
The European Union (USD 15.6 billion),
The United States (USD 5.8 billion),
Japan (USD 5.2 billion),
South Korea (USD 3.8 billion),
Taiwan Province of China (USD 2.6 billion)
Vietnam (USD 2.3 billion).
India is among the 15 most affected economies due to the novel coronavirus epidemic and slowdown of production in China, with a trade impact of 348 million dollars. Besides its worrying effects on human life, the novel strain of coronavirus (COVID-19) has the potential to significantly slowdown not only the Chinese economy but also the global economy. China has become the central manufacturing hub of many global business operations. Any disruption of China’s output is expected to have repercussions elsewhere through regional and global value chains, UNCTAD said.
Economic effects of the novel coronavirus on the Indian Economy:
The impact on India is felt through supply chain disruptions from China as well as regional players, who in turn are net importers from China. India’s annual trade with China is $90 billion (India imports goods worth $75 billion and exports goods worth $15 billion). These include ‘electrical and telecom machinery,’ ‘organic chemicals,’ ‘nuclear reactors,’ ‘plastics’ and ‘pharmaceuticals.’ The first four of these five groups also make up India’s top imports in 2019 fiscal year.
On account of factory closures in China, supply chains would get disrupted and this could result in shortages, especially of electronic goods and medicines. A key supplier of generic drugs to the global market, Indian companies procure almost 70 percent of their active pharmaceutical ingredients for their medicines from China.
Trade deficit prints may be lower for the next couple of months. We may see the price of consumer durables inch higher. This would drive core inflation higher, which is showing signs of bottoming out. This, in turn, could make it more difficult for the MPC to provide further monetary policy stimulus. January’s core inflation print came in at 4.2 percent compared to December’s 3.8 percent.
Fall in global crude prices on account of an anticipated slowdown in demand would also result in a lower import bill. The sectors that are likely to be impacted on the export front are diamonds, leather and petrochemicals. China is the world’s biggest oil importer. With coronavirus hitting manufacturing and travel, the International Energy Agency (IEA) predicted the first drop in global oil demand in a decade.
Imports are likely to contract more than exports and therefore, from a current account perspective, the outbreak could actually be rupee-supportive. Offshore fundraising by Indian corporate is also likely to slow down, as raising money onshore has become cheaper after the LTRO announcement by the RBI.
The retail mobile trade, for instance, is almost entirely dependent upon China. While every month, old models of mobile phones would see a drop in prices as new models are supplied, in the current month, no such drop in prices has taken place and the supply of goods is being rationed by companies