Coronavirus: The economic Impact of COVID-19
Today, China being the world’s second-largest economy is a core hub for business sectors. Right now China has worked with 80,814 cases of coronavirus(COVID-19) out of which 64,139 cases have been treated, 3,177 deaths have taken place and 13,498 are still active cases being treated. In 2003 under a similar situation when severe acute respiratory syndrome (SARS) hit which was a major outbreak in China about 5300 people were infected and 349 were killed nationwide. Then China was the sixth-largest economy in the world and now it’s the second biggest with a higher share of global growth and activity. Although the year 2020 seems the same in terms of an epidemic that has not only shaken China’s economy but the gigantic globe.
China is the world’s factory where huge technological production is done, out of which many things are being shuttled. It is the largest exporter with around US $2.2 trillion dollars of production being exported yearly. As we heard from apple, for instance, there has been a major drop in iPhones sold in China as compared to last year. On the other hand, they are analyzing the impact of coronavirus(COVID-19) at some of the factories that supply Apple’s goods. Apple’s main supplies Foxconn says their output has shrunk to 50% of the production capacity.
It has an unpredictable impact as a supplier of parts to the world and it’s going to last long. Being a prominent producer of consumer electronic products and even electrical components, it will lead to increment in prices for about 20 percent. Wuhan also is known as China’s optical valley and also the place where the virus started, which is the base for indigenous memory chip-based companies. Manufacturing and supplying 3D NAND flash memory used in personal computers and laptops are under zero production scale as the city has been on lock down since Jan 23, 2020. Other companies like H&M, Sony, Nike, Jaguar are also concerned about major product and outlet closure.
This year can be hard for the inbound as well as outbound tourism of China. It has inbound tourism of about 142 million people traveling China each year, totaling up to US $127.3 billion dollars in revenue. On the other hand, China is the world’s largest tourist with 140 million traveling abroad each year, totaling up to US $250 billion dollars. Chinese tourists are much higher spender than the average visitor. They are fond of various brands companies and tourist places adding major value to the various economies. Asian destinations are most popular among Chinese tourists, with approximately 90% of market share. Every country will suffer in term of air traffic and tourism, this epidemic situation might not stop things but yes will surely slow down the economy to some extent.
Oil Price War
On one hand, Russia and Saudi Arabia are risking economies and lives by just getting into an oil price war, on the other hand, the world is already challenged with coronavirus(COVID-19). In a recent interview with Financial Times Fatih Birol, head of The Paris-based agency said “The world is facing a major challenge in fighting against coronavirus(COVID-19), I find it at best irresponsible that they are having a price war now. The people of the world will not forget who was on the side of fighting the virus, and which countries were on the side of making the fight much more difficult.” Making things difficult for other economies, when people are just worried about their lives.
In 2018 Microsoft’s co-founder gave a fair warning that the world needs to prepare for pandemics like SARS, Ebola Virus, Swine-Flu.
“A fast-moving airborne pathogen could kill more than 30 million people in less than a year.”–Bill Gates
China is definitely in a difficult situation although the Chinese government has poured billions of dollars to restore economic slowdown and investors’ confidence. China plays an important role in terms of size in the global economy but also in terms of its trade links with other countries. India being majorly dependent on China for electronics and more significantly for generic drugs as India imports about 60% percent of its drugs and chemicals from China.
In India, the number of infected people is increasing day by day leading to the shutdown of offices, schools, meet-ups, cafes, and cinemas. Coronavirus is spreading like a plague from one country to another, and from one person to another. This might not end well for those who have been influenced by it, but also will not end well for others from economical as well as social point of view. This can act as an opportunity for Indian as today the leading exported in electronic goods has a major halt. Although the consequences are much severing than opportunities.
-Article By Kunal Bhambhani