Corona Virus Epidemic: Politico-Economic Fall Out

COVID-19 epidemic is a global crisis now, engulfing dozens of countries in an  economic crunch. Nearly three months since the first case of Covid-19 appeared in Wuhan, China, the disease continues to spread unchecked around the world. Recently, Italy announced lockdown and quarantined more than 16 million people because of heavy surge in corona virus cases. John Hopkins University reported more than 3594 deaths globally while more than 106,161 confirmed cases of Corona virus.  In response to the global impact of COVID-19, World Bank recently pledged up to 12 billion $ dollars, including 8 billion $ to finance countries dealing with corona virus outburst. On 5 March a study from China, reported that children are as likely infected as adults.  This key piece of data supported the school closures as an effective intervention. In J&K, Govt also announced closure of primary schools to protect and prevent COVID-19 spread. Infecting a large populace daily, this disease has caused politico-economic fallout globally. The political fallout, in some cases, could further complicate restraint efforts. Experts like Urasia Group (political risk analyst body) are analyzing the challenges faced by authorities in some of the key battlegrounds against the disease.

China being home to most of the infected people, the stakes are the highest in China. President of China Xi Jinping takes this deadly epidemic as a crucial governance test for communist party of China and hence his own canon. China’s response to the virus i.e., Quarantines and local level lockdowns allowed Beijing to steadily bring down the number of new cases but consequently brought Chinas financial system to a standstill. A report from CNN revealed that experts anticipate that corona virus could plunge the China’s economy in first quarter since the 1970’s. In China lot of sectors are affected, like automobile sales have plunged 80% and passenger traffic is down by 85 % from normal levels, so the economy in other words, has practically ground to a halt. Bloomberg Economics estimates that GDP growth in the first quarter of 2020 has slowed to 1.2% year on year- the weakest on record. In addition, Bloomberg reports that Corona virus could cost the global economy $ 2.7 Trillion that approximately equals the amount U.S has spend in Afghanistan for 19 long years.

China is now in the crucial period and the president Xi is forcing officials to resume work and production in areas of the country without large outbreaks, but also to not relax vigilance in containing the disease. New infections would be highly embarrassing for Beijing at home as well as abroad. Local Govt’s are employing electronic surveillance measures and other tools to monitor the population and stop new outbreaks as millions return to work. But the overall result of this cautious approach is at a very slow pace of recovery for the economy, which was already grappling with the effects of a long-running trade war with the US. Beijing is thus under increasing pressure to roll out new stimulus measures. The authorities for now are focused mainly on fairly targeted measures – lower lending rates, fiscal aid to local governments, and suspension of employment-related taxes. The human and economic cost of the corona virus epidemic is climbing across China and beyond.  In just over a week, South Korea has become the second largest epicentre of the spreading Corona virus after China with large number of cases (over 6,000). There are some accusations about the Moon Jae-In’s administration that they have not moved hard and fast against COVID-19 , due to this Presidents popularity is getting affected particularly while gearing up for National Assembly Elections next month. Conservatives and other detractors allege that Moon has not imposed tougher restrictions on Chinese entering the country because he is prioritizing political and economic relations with China at the expense of the Korean public’s health. Meanwhile, news of temporary closures at facilities operated by firms viewed as critical drivers of South Korea’s economy such as Samsung, Hyundai, and LG has heightened concerns about virus related supply chain disruptions. If more Korean business operations are halted or curtailed, voters are likely to become more anxious and resentful. Japan in response to weaker economy and Corona virus spread, firstly focused on not stoking fear among the populace and markets about health risks, economic security and most important  the Olympic Games to be held this summer in Tokyo. But when situation was not under control, Prime Minister Abe Shinzo’s Government redoubled its efforts to provide more support to halt the outbreak. Authorities last week issued an order for closure of elementary, middle, and high schools for several weeks to prevent COVID-19 spread. If more parts of Japanese society and the economy go offline, the risk will increase that momentum behind preparations for the summer Olympics slows, feeding into fears that the Games might be cancelled. The loss of the Olympics would deal another blow to the public’s confidence in the economy and his leadership.

Italy is grappling with the largest number of cases in Europe; the Corona virus has a silver lining for the embattled Governments of Prime Minister Giuseppe Conte. Both members of the fragile ruling coalition, as well as opposition parties, would now struggle to make a convincing case for changing the Government. It is also noteworthy that the regional Governments involved in fighting the outbreak are run by the far-right opposition party, which will increase incentives to maintain a peaceful co-existence with the ruling parties in Rome. Regional Governments are responsible for healthcare policy, meaning they are heavily involved in the response, but will also share some of the responsibility if the crisis gets out of control. Though elections are unlikely this year, the long-term impact of the crisis on political stability is more uncertain, especially if the health situation worsens dramatically or Italy is hit by a severe recession.

Talking about the U.S.A, the outbreak could be the first major crisis of President Donald Trump administration and it is happening in an election year. It is not easy to anticipate how the potential spread of the Corona virus could affect the presidential race, but the balance of risks is more to the downside for trump. His own actions could exacerbate fallout from a severe, persistent spread as citizens look to the government for clear and coherent action.

India is among the 15 most affected economies due to the Corona virus epidemic as slowdown of manufacturing in China disrupts World trade, according to a UN report.  The trade impact of the Corona virus epidemic on India is estimated to be about 348 million dollars. For India, the trade impact estimates to be the most for the chemical sector at 129 million dollars, textiles, and apparel at 64 million dollars, automotive sector at 34 million dollars, electrical machinery at 12 million dollars, leather products at 13 million dollars, metal and metal products at 27 million dollars and wood products and furniture at 15 million dollars.  According to UN report COVID 19 outbreak is disrupting world trade and could result in a 50 billion dollar decrease in exports across global value chains. The most affected sectors include precision instruments, machinery, automotive and communication equipments. Among the most affected economies are the European Union (USD 15.6 Billion), US (5.8 Billion), Japan (5.2 Billion), South Korea (3.8 Billion), Taiwan (2.6 Billion), Vietnam (2.3 Billion), Indonesia (312 Million dollars). Corona virus pummels Iran leadership as the data reveals spread is far worse than reported. About 2 dozen members of parliament and 15 other top figures are infected including Vice president, deputy health minister and an advisor to the head of judiciary. It has killed an advisor to Ayatollah Ali Khamenei Iran’s supreme leader. There has been 17 % surge in deaths between last Tuesday and Wednesday. The Govt’s response to the virus remains to be fragile and questionable. The officials have rebuffed calls for quarantines and urged Iranians to participate in national elections and denied closing holy shrines to the public. Iran’s health system was already battered by broad U.S economic sanctions that have curbed the country’s ability to finance humanitarian imports

Dr. Muzaffar Shaheen Professor/Head, Dept. of Epidemiology & Preventive Medicine; Dr. Abrar Ul Haq Wani is PhD Scholar, Dept. of Medicine FVSC & AH, SKUAST K.