The outbreak of Coronavirus (COVID-19) in China in December, 2019, has been impacting lives across the globe ever since. Declared a pandemic by World Health Organization (WHO) on 11th March, 2020, which essentially means spread of a disease across the globe caused by a new virus or organism for which still there is no effective response or vaccine. While the scientific research community is working hard to combat the influenza type virus and find a solution to it, the ‘unknown devil’ has till date claimed around 5000 lives across the world. Although the death count is not as staggering as compared to the earlier pandemics, its impact on lives and economy cannot be undermined or underestimated. Acknowledgement of Coronavirus (COVID-19) by WHO as a pandemic indicates the epidemic getting rampant in multiple countries and continents simultaneously. WHO has taken this step to create a sense of urgency, so that an aggressive posture and action is taken by the nations for the containment of the disease. As we know, COVID-19 or the Novel Coronavirus originated in Wuhan in Central Chinese Hubei Province and has currently spread across the globe with 1,33,860 confirmed cases till 13th March, 2020 (Source:WHO) in not less than 114 countries. Although in India the current level of infection is 83 and two deaths so far, as per Govt. of India sources (MoHFW), we really do not know what the future beholds?
The virus outbreak has become one of the biggest threats to the global economy and financial markets. Major institutions and banks have cut their forecasts for the global economy including OECD. The disease has spread rapidly around the world having originated in China and travelling to Iran, Italy, South Korea, France, Germany, Spain and India among the 114 countries that have reported Coronavirus cases.
A brief look at the HistoryHistorically there have been six Pandemics across the globe, which have claimed millions of lives.
1. The Great Plague of London – the dreaded Bubonic plague in the 14th Century, which was known as Black Death and which resurfaced in 1665, killing innumerable lives.
2. Spanish Flu (1989) caused by H1N1 Virus. Nearly 500 Million people got affected by this virus which caused nearly 50 Million deaths.
3. Asian Flu (1957), which originated in East Asia due to Influenza virus H2N2 Strain. Nearly 1.1 Million people died.
4.1968 Flu Pandemic, which originated in China in 1968, because of H3N2 Virus and killed 1 million people worldwide.
5. 2009 Flu Pandemic or Swine Flu, killing 5,75,000 people worldwide.
6. HIV AIDS of 1980’s causing 25 Million deaths and 65 Million infections till date. Source: Center for Disease Control (CDC).
Hence, while we have read with horror about Spanish Flu, Hepatitis, MERS, Ebola, Japanese encephalitis, Marburg virus, Lassa Fever Virus etc., this is the beginning of COVID-19 about which we must understand the impact on human lives and economy – sooner the better. One good step taken is that with the immediate sharing of information countries, action taken by WHO and the alarm raised, countries have pulled up their socks and taken immediate steps to stop spreading of the disease.
Major impact on the economy world-wide
The major influence visible on the economies comprise:
a) Downgrades in economic forecast. Forecasts for the global economy have been severely downgraded.
b) Slowdown in manufacturing in major economics including the US, Eurozone, China and Japan.
c) Services industry - because of reduced consumer demand and spending, retail stores, restaurants, transportation and aviation industry have got seriously affected.
d) Slump in oil price – because of reduction in global economic activity, the recessionary tendencies got intensified.
e)Stock market mayhem - Stocks have tumbled like nine pins in most of the countries touching their lowest in recent memory. Investor’s wealth of around 11 Lakh Crores INR has vanished in thin air with the market plummeting. BSE and NSE have taken a hit exceeding 20% with the stocks tumbling. The trading halts starting in Bangkok, Manila, Jakarta, Karachi have reached the Middle East and European and American shores. The MSCI (Morgan Stanley Capital International) All-Country World Index fell as much as 2.3% wiping off $ 11 Trillion in a huff. Australia, Japan, Jakarta, Singapore, UK, Germany and others have all hit the bear market confirming the pandemic nature and aftermath of the COVID-19 outbreak.
f) Lower bond yield. Even safe haven assets are getting impacted and causing fleeing of investors.
Combating COVID-19 Worldwide
Since the outbreak of the COVID-19, the Chinese Government has been trying to grapple with the problem, which has made the entire economy go kaput. It has severely impacted business travel, tourism industry, hotel industry, share markets etc. The international market including the Dow Jones, NASDAQ, Tokyo Stock Exchange, Shanghai Stock Exchange, Hong Kong Stock Exchange, Sensex and South-East Asian Markets have taken the brunt of the disease. The already limping economy has felt the bear hug and no one knows when the markets will rebound.
The efforts to contain the disease have been initiated at all places. India has proactively adopted an aggressive posture in limiting travel of foreigners to prevent community transmission of Covid-19. Although travel restrictions, surveillance, social distancing and sharing of information to stop panic have taken a toll on the economy and will further aggravate bearish tendencies, it is an indispensable action which the Governments have to take for the containment of the pandemic. The closing of cities in China, creating quarantines, suspended business operations and moratorium on travelling has already put severe pressure on the world economy considering the size, linkages and magnitude of trade of China with the leading economies.
However, a silver lining is discernible with the Chinese claiming that the COVID-19 graph has reached the inflexion point in China and lesser cases are coming to light with the massive disease containment exercise undertaken in China. For India and other tropical countries, there is a hope that the virus may not survive for long with the onset of summer if full care and precautions are taken since it is not known to survive in temperature ranges of 30 deg Celsius or above.
In India a lot of advisory is being shared to prevent COVID-19 and with the aggressive measures and restriction being imposed, we hope the steps will bear fruit and the disease will finally vanish from the scene. The sooner it happens, better will it be for humanity.
The writer is Head – Corporate Affairs, Adani Power (Jharkhand) Limited. He can be reached at Amritanshu Prasad (prasad.amritanshu@gmail.com)