Coronavirus or COVID-19 as it is commonly known as is something that came like an unexpected nightmare in our lives. It is life itself, that has been affected by this virus. This means that an individual at any level has been affected due to coronavirus. It was like a sudden interruption in our daily lives leaving us confused about how to continue earning our bread and how to survive.
Other than the emotional and psychological damages, the virus has already infected more than 20 lakh people throughout the world and still it is showing no signs of abating. In the times of this evolving crisis, where no one is able to confirm the expiry date for this virus and what would be its long – term impact, the stress has been placed equally on the individual, society, and government.
As a result, it is not surprising that amidst the coronavirus pandemic, the economy is bound to suffer. Since, a vaccine is yet to be found, to flatten the curve of this continuously increasing infection, several countries across the world resorted to promoting lockdowns.
These lockdowns further lead to confining millions of citizens inside their homes, shutting down the businesses and thereby, ceasing almost all of the economic activity out there and hence pushing major economies to the brink. If the prediction of the International Monetary Fund is to be believed, then the global economy can shrink by as much as over 3% in the year 2020 which if happens, will be considered as the steepest slowdown since the Great Depression of the 1930s.
How hard of a blow has the economy experienced?
The coronavirus pandemic has pushed the global economy into a state of recession, which if explained in simpler terms means that the economy has started to shrink and the growth, on the other hand stops. Even in big economic places like the US, coronavirus has led to millions of people filing for the unemployment benefits. By the month of April alone, the figures were at 20.5 million but the worst part is that, this figure is expected to see a rise as the impact of the pandemic on the US labor market worsens.
Other than this, the economies of the US, the UK, France, Spain, Japan, Germany, and Italy are also expected to contract by the year 2020 by 5.9, 6.5, 7.2, 8, 5.2, 7, and 9.1 respectively. In fact, most of the advanced economies have received a bigger blow and when considered together, they are expected to grow by -6% in the year 2020. Even the emerging markets as well as the developing companies are expected to shrink by -1%.
China’s overall GDP witnessed a drop of 36.6% in just the first quarter of 2020. In Europe also, the GDPs of France, Italy, and Spain dropped by 21.3%, 17.5%, and 19.2% respectively. Excluding China from this pool of countries, the estimated growth for 2020 is expected to be somewhere around -2.2%.
The global shares have also seen a hard hit. Big shifts in stock markets, where the shares in companies are bought and sold, can further affect the overall value of pensions or individual savings accounts too. Investors fear that the spread of coronavirus pandemic can destroy economic growth and also, that the government action may not alone be enough to stop this decline and stop the spread of coronavirus pandemic
In response to this, several banks in many countries have slashed interest rates too, which is seen in theory, which would further make borrowing cheaper encourage spending which will boost the economy. Though efforts have been made to boost the economy, some analysts have already warned that all these efforts may prove to be volatile until the pandemic is contained.
Oil and Natural Gas
Since people throughout the world are trapped inside their houses due to lockdown, it is not surprising that the demand for all has all but dried down. Travel has witnessed a huge fall which has obviously affected the global industrial activity. With the transport section, which accounts for 60% of the total oil demand, was further hit due to the lockdown impositions in several countries, the oil prices fell even more in March.
In fact, the coronavirus pandemic has driven the prices down to unimaginable extents. For instance, in the US, the price of a barrel of West Texas Intermediate turned negative for the first time in the entire history. This dip in prices, is not just limited to only oil but also to natural gas. During the early phase of the year 2020, due to the coronavirus pandemic related containment measures in China, the demand for natural gas fell down which further resulted in many Chinese LNG buyers to halting their imports as the storage tanks were fully filled.
Food and beverages
A decrease in food prices has been experienced by 2.6% in the year 2020 which was simply caused due to the disruption in the supply chain, border delays, concerns for food security in various regions affected by the coronavirus pandemic as well as due to other export restrictions. Overall, the limitations imposed due to COVID-19 have resulted in impacting the food industry too.
Moreover, while in the prices of cereals, seafood, oranges, and arabica coffee has increased, the prices of wool, meat, cotton, and tea have undergone a steep decline in this lockdown period. Further the decline in the oil prices has also served part in putting downward pressure on the prices of stuff such as palm oil, sugar, corn, and soy oil.
Even though several countries across the globe are doing numerous efforts to maintain the situation and resume the economic activity gradually, but in the end we should understand that the overall situation will ultimately take some time to get back to normal. One of the factors behind this is that the behavior of consumers will see a change as a result of continued social distancing and also because of uncertainty about how the coronavirus pandemic will eventually evolve.