How is CoronaVirus Affecting the World Economy?
According to the World Health Organization (WHO), it has become a Pandemic worldwide. Coronavirus is getting on our nerves and immensely affecting the major parts of the world. Since it’s an outbreak, various people are infecting readily. It has been priced so aggressively that it’s leading to lockdowns. Starting from its epicentre in Wuhan, China, coronavirus has a massive spread to its immediate countries. Across the major countries in Europe, the US, and Asia, thousands of people are getting affected. After China, Italy has been majorly affected by Coronavirus, which led to many deaths and lockdowns to World. This situation is leading to a massive change in the economy around the globe.
The Coronavirus outbreak has brought human suffering and major economic disturbances. In a situation like this, it’s highly unsure of what’s happening around. The business entrepreneurs are literally in a situation, which might drag them down to revive their normal positions in the market.
Truthfully, due to lockdown, everything will be shut down. Hence, that will provide no means of exchanging business nor anything else. The GDP forecast will be dubious when such a Virus trajectory is unavailable. Thus, it might be able to fall in the path of the global recession. The valuations of the assets might spike up with its premium along with government bonds after spreading Coronavirus. As a result, various mechanical models of recession are heavily going to conquer leading to bring down a Global Economy.
What Economic Problems Might it Face after the spreading of Coronavirus?
Well, in this situation market sentiments can be misleading, abrupt. The recessionary risk is real and it brings vulnerability as major market countries like the US, are facing troubles. An exogenous shock hitting the global market leads to greater economical risks.
The recession can fall into one of the three categories. The major categories are – real recession, policy recession, and financial crisis.
Real recession can lead to a bust of detailed expansion. It may also cause severe exogenous demand and supply shocks that can contract down the real economy.
Policy recession, on the other hand, might cause the financial conditions to tighten up. The risk, in this case, remains modest under the US economy, whereas it might lower down into rock bottom levels at the other countries.
The financial crisis will tend to build up slowly over a large period, before rapidly unwinding, disrupting financial intermediation, and then the real economy.
Already there are some risks which are currently mark after the spreading of coronavirus. In developing countries like India, Bangladesh and others can face a remarkable downfall, which might lower down rates and turn the business modules static. The economic risks can enable us to have a potential stakeout if the risks are not dismissing completely.
How to Lower Such Risks?
- Avoid dependence on projections. The financial market is currently facing uncertainty, that might lead to a wide range of scenarios.
- Try to focus on consumer confidence signals, trust your instincts and know the way to leverage or boost your company. The impact might not be uniform, but it will be specifically aimed at your industry. Plan for the worst trajectories and outcomes.
Thus, if we look at the Global Economy under the complete graphs of V-U-L, then it will likely help us to look for the supply and demand. In such a time of crisis, the basic structures of the micro and macro economy can help us to face the situationṣ and combat the battle.
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