With the passing of several months since its sudden arrival it is by now clear that COVID-19 has dealt a devastating blow to the global economy. But global economy is not a monolithic structure. It is an aggregate of many national and regional economies. The virus, it is widely believed, has originated in China which after boasting of impressive growth rate is now nervous about its decline. But China is not alone in this situation. There has been a steep fall in economic activities around the world. There are large scale lockdowns and quarantined spaces. The Governments in different parts of the world are trying to provide stimulus packages and incentivise production process to cope with the adverse economic situation.
But not everyone is optimistic. World Trade Organization (WTO) economists argue that the decline will likely exceed the trade slump brought on by the global financial crisis of 2008‑09. “The unavoidable declines in trade and output will have painful consequences for households and businesses, on top of the human suffering caused by the disease itself”, mentioned the WTO Director-General, Roberto Azevêdo in a press release on 20 April, 2020. He also warned that the world trade is expected to fall between 13% and 32% in 2020 as the COVID 19 pandemic disrupts normal economic activity and life around the world.
There are scholars like Stephen Rosh, economics professor at Yale University, who is rather doubtful about the success of such measures, at least in near future. He does not think much about the effectiveness of the adopted fiscal and monetary policies. While one may indulge in debate about Rosh’s opinion it is important to point out that we are confronted globally with an unpleasant economic scenario. Not only China, worse affected will be developing economies like India, China’s neighbour, whose economy in the pre-pandemic period was being considered to be ‘rising’. Even the advanced economies like that of the USA are not immune from the pandemic effect on economy. In a sense, COVID-19 is a ‘great equaliser’. It spares none, no matter how robust the economy is.
The issue is not to panic or not to give up. The fight must go on against the dreadful virus not only in epidemiological and biotechnological terms but also in economic terms. The global economic fight, however, cannot be waged only at the level of individual economies. The national economies must fight from their own locations but should also establish and sustain proper networking in this endeavour with other economies. The synergistic effort pays. For instance, one of the worst affected domains of the economic onslaught of the pandemic, the share markets, according to The New York Times faced the ‘tornado like head wing’. But a positive development is that after initial rout, stock markets are rebounding. It provides a lesson: that the countries must come together to fight the virus rather than trying to shed each other’s blood, economically speaking. Morgan Stanley’s Chief Global Economist, Chetan Ahya, has recently in an interview mentioned that he doesn’t think that the virus shock would fundamentally challenge the growth cycle. The word ‘fundamentally’ is very important. The underlying logic is that the global economy periodically has weathered a number of shocks but still has managed to experience growth.
Much of information about the global economy remains cloudy. Not everything can be expected to be clear. But let us understand that if different countries unite to fight the ravages caused by ‘the common enemy’ there is a recovery possible. One agrees that there is stiff competition among the economies of the world for the twin pursuit of wealth and power. One also understands that ‘mercy, and ‘charity’ are not the norms of economic competition. But the pandemic has sent us an implicit signal: the national economies should indulge in ‘minimal cooperation’ among themselves at this stage to revive intense competition. When everybody is talking about ‘social distancing’ in this case it has to be ‘economic proximity’.
Eduindex News 