Global economic slowdown is unprecedented and has left a deep imprint across different segments of the world economy. But certain businesses have also benefited during the crisis such as e-commerce, food retail, and the healthcare industry .
Unprecedented slowdown of the world economy:
The COVID-19 pandemic has left a deep imprint across different segments of the world economy and set off an unprecedented slowdown. India, as a rising economy, couldn’t have kept itself protected from the tribulations of this emergency. For India, the COVID-19 pandemic couldn’t have come at a more regrettable time. The Indian economy was estimated to grow at 5.5 % but that growth estimate has now gone for a toss. World Bank and credit rating agencies have downgraded India’s growth for fiscal year 2021 with the lowest figures India has seen in three decades since India’s economic liberalization in the 1990s. However, the International Monetary Fund projection for India for the financial year 2021-22 of 1.9% GDP development is the most elevated among G-20 nations. Also, during the lockdown, an expected 14 crore (140 million) individuals lost employment. More than 45% of households across the country have reported an income drop as compared to the previous year.
The much necessary “lockdown” and suspension of work and movement, announced by the Indian government, to contain the progression of infection in the country has brought a slump in consumer demand with individuals just purchasing fundamental products and maintaining a strategic distance from the acquisition of trivial items. Sectors like travel and tourism, restaurants, shopping centers, and multiplexes have been the worst affected with almost immediate effect. Migrant laborers are seen swarming over our national roadways amid the lock down, small businesses are forced to shut shops resulting in job losses. In short, the less advantaged has been hit by the lockdown, a vital aftermath of the pandemic, the most noticeably terrible consequently adding to our woes.
Disturbed global inventory chains and stock exchange:
Times like this call for a joint effort from countries all around. Despite the evident danger the global economy is in, there are also reasons to be hopeful that the worst-case scenario can be avoided. Governments have learned from previous crises that the effects of a demand-driven recession can be countered with government spending. Thus numerous governments are expanding their monetary welfare to citizens and ensuring that businesses have access to funds needed to keep their staff employed throughout the pandemic. Moreover, certain businesses have also benefited during the crisis such as e-commerce, food retail, and the healthcare industry – providing at least some economic growth to offset the damage. Finally, we still have hope that when all restrictions would be lifted (once the vaccine is developed) this would lead to a sharp bounce back once the pandemic is over. There are as yet numerous factors that could influence such economic recovery, for instance, a reduced supply of goods and services to meet lower demand could create mid-term shortages and price increases – but there are some reasons to think that, with the correct blend of fitting government reactions and luck, a portion of the more apocalyptic predictions may not happen.
Dr. GSK Velu
Chairman & Managing Director