Corona Virus: Black Swan of the Global Economy

Corona Virus: Black Swan of the Global Economy

Communicating public health risks during an epidemic can be challenging. At the time when amazon ran out of medical masks, WHO had not yet announced Covid-19 as Public Health Emergency of International Concern (PHIEC). As a consequence of the same, many took it as a body blow. But it wouldn’t be wrong to say, it turned out to be a black swan for the global economy.  Even the world’s most powerful economy, the United States, is embarrassingly facing economic and health catastrophe. Effects of Covid-19 will leave lasting scars on the global economy, said World Bank in an analysis of the crisis issued recently. Needless to say, it has left economies around the world counting the costs.

Consistent efforts of several countries to flatten the curve of the infection and to resort to lockdown has resulted in a major slowdown. According to the International Monetary Fund (IMF), the global economy is expected to shrink by over 3 percent in 2020 – the steepest slowdown since the Great Depression of the 1930s. The economy is shrinking and growth has stopped.  A wave of job losses and hiring freezes has become conventional amid the crisis. Not only this, but it has also impacted stock prices and bond yields worldwide. The biggest threat is on investors with the GDP of economies around the world falling significantly. Saddening is the fact the impact still seems unquantifiable to some extent.  Big shifts in the stock market can further affect the value of pensions or Individual savings account.

Some people are of the opinion that it has bought about a significant change in environmental plight. But a global pandemic that is claiming people’s lives and no doubt has left a scar on the economies of the world shouldn’t be seen as a way of bringing about environmental change either. The outbreak of the coronavirus is meanwhile rippling through the global manufacturing supply chains. But not only this there are several major concerns associated with this pandemic. As per a report, the United Nations agency World Food Program (WFP) claimed that this pandemic will lead to an uptick in global poverty and starvation, and the response to the virus itself may end up killing more people by the end of 2020. Crashing oil prices, mass job losses, cratering economies, and overall disruption of the supply chain is the grim reality of today. The global economy would look nothing like it did before. And that would be our new normal.

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