The World is battling the coronavirus at an unprecedented pace. The Western economies along with Japan propose to put in $5 trillion dollars to revive their economies, of which the US will put in $2 trillion dollars back into its system. It all started from Wuhan in China’s Hubei province. The toll in China has crossed 3,200 fatalities, while worldwide it has already taken over 7,500 lives, and these figures are still rising.
Total cases of infection stand at over 190,000 of which over 80,000 are in China alone. While this spread is worldwide, there are spots of high intensity. These countries are Italy, Iran, Spain, Germany, South Korea, France, USA, Switzerland, and the UK. The World Health Organisation (WHO) has declared coronavirus a pandemic and requested private players to contribute to handling this emergency.
Google and Facebook are the first to commit their contribution.
The origin of the coronavirus is understood to be from a wild animal market in Wuhan, where people consume wild animals, eg, bat soup, python meat, monkey, dog, and many others. There is also the theory that the spread of the virus could have occurred due to leakage of some pathogens from biological weapons being developed in the L-4 lab in the outskirts of Wuhan.
Apparently, a Professor from Harvard University was being paid heavily by China to develop the pathogen for bioweapon in the above lab, but the veracity of this claim has yet to be determined. People onboard ships have also been infected, which gave rise to the theory that the virus was carried by the wind. But that theory was disproved as the virus, as has now been determined, is spread by contact.
Obviously, an infected person got on the ship and spread the virus to all on board. Coronavirus’s economic impact will gradually sink in as time goes by. Some predictions point at about half a million fatalities, with the havoc continuing for a year! In addition to being a human tragedy, the economic consequences could be far worse.
Electronics and pharma industries worldwide have taken a hit since the supply chain hub in Hubei has been under total locked down. Industrial and manufacturing outputs have slumped since China is a major source of supply to the world. The crude oil prices slumped over 35%. The Indian government banned the export of some medicines to avert shortages at home.
There is a restriction on travel which has hit the airline and hotel industry very hard. The US has banned the entry of passengers from affected countries. In India, automatic entry of OCI cardholders is also held in abeyance. Very soon, major sports events such as Olympics, football World Cup, IPL, Basketball will be impacted. Entertainment industry too has taken a hit, with movie halls and restaurants, malls etc where more than 100 people congregate are on way to shut down. People are being advised to stay indoors and self-quarantine. WHO has declared Italy as an epicentre of coronavirus in Europe.
India has greater risks which have been handled well so far by the Government by implementing preventive measures. However, no one knows how long will it last. We have our own share of festivals, eg, Durga Puja, Diwali, Ganesh Chaturthi, Christmas, etc where large gatherings take place increasing the chances of coronavirus spread. The government may issue advisories and leave it to the judgment of citizens since passing orders banning festivals may be politically incorrect.
People staying home and glued to TV or computer screens is detrimental to all economies, particularly country like India where consumer durables are vulnerable to these shocks. India is yet to recover from NPA losses, the next recession worldwide seems inevitable. With workers staying home, the output of consumer goods will slump.
Government would be compelled to tighten expenditures and loosen financial system to revive the economy by stimulating spendings. The Defence manufacturing projects will get delayed further due to labour shortages in shipyards. So will other defence manufacturing industries will be impacted. One is back to ‘fight with what you have’. It is time to increase vigil, since adversaries could increase their activities to force higher expenditures than envisaged. Probably, the Coronation of Economy has begun.
Vice Admiral Shekhar Sinha, PVSM, AVSM, NM, and Bar is the former Commander in Chief, Western Naval Command & amp; former Chief of Integrated Defence Staff. At present, he is a Trustee, India Foundation. He is also Member BoG, MPIDSA, USI, ICWA, PPF, and Sunday Guardian.