Effects of Corona Virus on Global Economy

The drastic spread of COVID-19 has brought the world economy to a halt. Projections of the potential effects of the COVID-19 catastrophe on the worldwide economy differ country to country. However there is a unanimous opinion which no one can deny, that the world economy is confronting the greatest challenge of all times after the post- Second World War era because of the unexpected halt caused by this pandemic in economic activities in both developed and developing countries. Many governments across the world are forced to impose strict lock-downs; shutting businesses and consumer mobility which has made the economic activity stagnant.

As the Governments, local and international business community and the common people grapple with an emerging pandemic crisis across the globe, the debate about the corona-virus effects on the global economy has also started and the results are scary. The international monetary fund (IMF) published its Global growth projections in mid-April, revealing that the global economy is expected to encounter the worst recession of all times since the Great Depression (post-war era).  However the recent forecasts updated by WTO are more alarming which has projected a negative growth rate of 9 percent for the year 2020, if we assume the worst case scenario which is more likely to occur.

The projections for the volume of trade of products and services across the globe are even more critical. In the World Economic Outlook, the IMF re-evaluated its projections of growth volume of trade of goods and services from a previously estimated 3 percent to - 9 percent which is quite shocking.  The global foreign direct investment (FDI) is getting equally affected and have experienced an extraordinary outflow of capital from the emerging economies ever since the COVID-19 pandemic became global and is also expected to witness the worst situation in the coming times.

Most of the studies projected the economic growth in 2020 reveal a major contraction around the world, however there are a few exceptions as well. Like the impact of the lock-down will be moderate in developed countries but it will hit the bigger economies hard. But the economic burden to contain the deadly virus could be more painful for developing countries to bear.

Based on the existing literature on the corona virus pandemic, most of the policy analysis directs the government to address each period of the emergency exclusively, and to differentiate between short-, medium-and long term targets and objectives. As the Epi-center of the corona virus was initially China but with time it spread more drastically in Europe and now the United states has the most number of reported cases and casualties, along with this shift the economic impact is also shifting and evolving. Results from various economic Impact evaluation studies focusing different economies across the globe have highlighted that the current economic crisis is expected to get worse with time. So, all the countries must make sure to formulate strategies and take adequate measures in order to respond to this global crisis.