CORONAVIRUS VS WORLD ECONOMY
| INTRODUCTION |
In December 2019, China has found a new virus belongs to the Coronavirus family named COVID-19 these new Coronaviruses have the capability of transmitting between humans to humans.
The virus, first detected in the Chinese city of Wuhan in December, has infected more than 600,000 people in at least 110 countries and territories globally, according to the World Health Organization. Of those infected, more than 20,000 people have died, according to WHO data to date. 29-03-2020
To break the COVID-19 chain, Chinese authorities locked down cities, restricted movements of millions and suspended business operations moves that will slow down the world’s second-largest economy and drag down the global economy along the way. To make things worse, the disease is spreading rapidly around the world, with countries like Italy, Iran, South Korea, France, Germany, Spain, and India have also seen a great hike in corona case.
Main points that show the impact the outbreak has had on the global economy and markets so far.
- Downgrades in economic forecasts
- The slowdown in manufacturing activity
- Services contraction
- Declining oil prices
- Stock market fall
1. Downgrades in economic forecasts
2. The slowdown in manufacturing activity
As the COVID-19 is spreading in huge volume in almost 110 countries to stop the virus chain many countries called for a complete lockdown in their countries due to which production of every material has been stopped in every country which results in the overall slowdown in manufacturing activity for the year 2020. China has followed a complete lockdown for more than 4 months and it has a big contribution in world overall manufacturing activities so, its lockdown period also has a huge impact on overall world manufacturing activity.
3. Services contraction
The virus outbreak in China has also hit the country’s services industry as reduced consumer spending hurt retail stores, restaurants, tourism, and aviation among others. China is not the only country where the services sector has weakened. The services sector in the U.S., the world’s largest consumer market, also contracted in February due to a reduction in “new business from abroad".
4. Declining oil price
A shutdown in big economies results in lower economic activity and also has lowered the demand for oil which takes oil prices to multi-year lows. That happened even before a disagreement on production cuts between OPEC countries like Russia and Saudi Arabia, Russia declined to lower production and its allies caused the latest plunge in oil prices. Reduced in oil demand from the virus outbreak and an expected increase in supply is a “double whammy” for oil markets. China, the epicenter of the coronavirus outbreak, is the world’s largest crude oil importer followed by India.
5. Stock market fall
Fear surrounding the impact of COVID-19 on the global economy has hurt investor sentiment and brought down stock prices in major markets. In many countries, their stock market has been fall by more than 40% our stock market in India BSE and NSE indexes SENSEX and NIFTY50 has also been fall by 31% Making things worse is the crude oil war between Saudi Arabia and Russia, which has injected volatility into other assets. “Earlier, only the equity and debt markets were impacted by the COVID-19 scare; now the commodities and currency market is uncertain due to the crude oil war.
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