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
Economic effects of the novel coronavirus on the World Economy:
The toy market sees nearly 80% of its demand met by products made in China, while only 20% is met by Indian manufacturers. Many items, like belt buckles, Christmas lights, specific parts of gas stoves, are only made in China. The prices of most of these goods had already seen an upward correction, and in some cases it is as much as 50%.
The travel and tourism sector will be affected badly. Several overseas airlines have stopped flights to China and international hotel chains have also been offering refunds. Most of the Chinese citizens are avid travelers and hence the tourism in other countries might feel the ripple effect. “The industry remains very fragile,” Brian Pearce, the IATA’s chief economist, told the Associated Press. “There are lots of airlines that have got relatively narrow profit margins and lots of debt and this could send some into a very difficult situation.”
Anyone hoping cryptocurrencies might prove a safe haven was disappointed. Bitcoin lost more than 30% of its value in the first 2 weeks of March.
Apple’s manufacturing partner in China, Foxconn, is facing a production delay. Some carmakers including Nissan and Hyundai temporarily closed factories outside China because they couldn’t get parts.
The pharmaceutical industry is also bracing for disruption to global production.
Many trade shows, cultural and sporting events across the world have been cancelled or postponed.
Covid-19 caught the world unaware and almost under-prepared to deal with the novel virus. Thus the direct health impact on the infected people has been disastrous.
Pandemics tend to have a disproportionately higher impact on the younger people. This is especially dangerous for a country like India which basks on the glory of the demographic dividend it enjoys.
The outbreak of infectious diseases can further stigmatize already vulnerable social groups and increase existing social inequalities.
Adverse social impact on the people who are being quarantined and isolated.
Immense pressure on the health infrastructure, especially in countries which do not have the culture of regular and routine health checkups.
Shortage of protective equipment and other necessities due to panic buying and hoarding.
International epidemics are a centuries-old phenomenon that has often changed the course of history. The Black Death, which some believe originated in China and others trace to the Crimea, caused devastation across Europe bringing political turmoil in its wake. Centuries later, it was European explorers who carried new diseases across the Atlantic — creating epidemics that decimated indigenous populations in the Americas.
Since the new coronavirus appears to have a mortality rate of around 2 per cent it will not have the impact of history’s worst pandemics. But, for a modern society, the worst-case scenarios are still shocking.
Professor Marc Lipsitch of the Harvard TH Chan School of Public Health has predicted that between 40 and 70 per cent of people worldwide are likely to be infected in the coming year — although many will have only mild symptoms or none at all.
A public health emergency, combined with a global recession, has the potential to change politics around the world. At this stage, the most obvious risks concern China, the US presidential election, a rise in international tensions, and the threat to the world’s poorest countries and to refugees.
Xi Jinping does not have to worry about re-election. Yet, the coronavirus still poses a threat to his popularity and legitimacy — and even, conceivably, to his leadership.
The Trump administration’s record on preparing for epidemics is also vulnerable to attack. After the Ebola virus outbreak of 2014, the Obama administration hosted an international summit to set up global arrangements to deal with future epidemics — and it created a unit in the National Security Council to focus on the issue. But that unit was disbanded by the Trump administration in 2018.
Since Covid-19 is affecting the entire world at large, the countries should join hands together and develop effective strategies to control the pandemic and focus on developing a vaccine to counter the disease.
In India, the central government, state and the local government need to synchronize their actions and isolate the potential cases. Awareness campaigns need to be held to sensitize people about the disease’s symptoms and treatment. Key institutions must be identified as resource centers and to act as nodal points for contact tracing, testing, communications and case management. Special focus must be on point of entry screening. In the long-term perspective, a well-researched pandemic/epidemic management strategy delineating the roles of different authorities and action points at various stages need to be formulated.