Covid19 and The New Economic Order

Pandemic Covid-19 has send the whole world into a tizzy. On one hand the world is grappling with its first round effects in terms of colossal loss to the life and health, the consequential effects on world economy of Covid-19 are far more detrimental and catastrophic.

Originating in the month of December from Wuhan, the manufacturing engine of the world’s second best economy, Corona Virus Disease 2019 (Covid-19) has gone global within the span of two months pushing the World Health Organization to declare it a Pandemic. So far the only antidote, Health Scientists and experts all over the world have been able to discover is two word mantra of Social Distancing- a response which is purely a social in nature as world top most technologies and expertise has so far failed to produce an appropriate medical response to the virus. Social distancing essentially a biological impact has been so far the only effective means to curb the wild fire spread of highly contagious Corona virus.

When the world is trying to mitigate the Covid-19 effects on life and health through social distancing and lockdown, the act has far reaching consequences on the economy. Second round effects of Pandemic Covid-19 are already in place. Except few essential supplies, there is a complete halt to the world economy. Investors and traders across the globe have shed the wealth worth trillions of dollars as stock markets like New York Stock Exchange, Nasdaq, Japan Exchange and many more have dived by more than 30% making the crisis severe than 2009 recession. On BSE India alone investors have lost more than Rupees one lakh fifty thousand crores to the ongoing volatility of the markets. Sparked by the looming crisis, the panic Buy and Sell, out of FOMO (Fear of Missing Out) and FOLE (Fear of Losing Everything), the stock markets are witnessing the complete chaos and uncertainty. With a breakdown of supply chain and reverse migration the manufacturing sector like Automobile, Iron & Steel, Cements etc have been rendered almost defunct. Hospitality sector which accounts for the worlds 10% GDP has gone into the limbo. With most transport being off the roads, Consumption of energy and fuel resources has receded drastically. India the world’s second most populous country and third major buyer of the oil has shown a 65% decrease in daily oil consumption compared  to the pre lockdown times. Agricultural sector which forms a backbone of any economy is facing a shortage of fertilizers, Pesticides, and basic agrarian activity due to the lack of labour created by mass reverse migration of daily workers. Economy has been badly hit as both supply and demand barring few essentials have come to square one. As the Governments and people are grappling with the immediate effects, ironically the ugly side of the Pandemic is yet to come.

Third round effects of Pandemic Covid19 could be more alarming and barbaric. Though governments across the ideologies have adopted more humane and responsive measures to mitigate the sufferings of common masses and business communities as well by injecting a sizable portion of wealth reserves into the markets to keep the economy afloat, yet the magnitude of Pandemic fallout in terms of unemployment, Poverty elevation and erosion of wealth would be very high. Post lockdown, the loss of jobs may surface as a major problem across the continents. Tourism and Hospitality industry encompassing almost 266 million jobs is already witnessing the prior shocks. British Airways has already sent its 22,000 staff on a compulsory No Pay leave. With its entire fleet grounded, Indian aviation sector is already facing an uphill task to feed the salary accounts of its staff. The condition of unorganized sector has already sounded alarming bells. In developing economies like India, daily workers and labourers working in unorganized sector may emerge as worst sufferers. Coupled with the Low Demand Low Supply, Reversed migration and supply chain breakdown closure of small scale industries will tell upon both the micro as well as macro sectors of the economy resulting in large scale unemployment, rise in poverty and negative growth rate- a situation which could send the already recessed world economy into jitters, thereby increasing an Uphill schedule for the governments already facing the heat at the hands of  so far uncontrollable virus.

Amidst the chaos and bewilderment caused out of Covid19, One of the possible 4th round effect  is that the Post Pandemic world will see nations across the globe  investing  in the Medicine, Health and the related research. Pharmaceutical industry is already gearing up for the mega revival. Many companies used to manufacture automobiles are already in producing medical equipment like ventilators, PPEs  and other surgical items. World which used to spend aggressively on Defense and security will be compelled to revisit its strategy. At least for few early Post Pandemic years, the rise of Health sector amidst the global recession is evident which may altogether turn round the economic tables around the globe and pave the way in grooming likely a new economic order……..