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Stocks are off to another volatile day with the Nifty and the Sensex hitting limit down within the first hour of trading as concerns loom that the coronavirus pandemic could shut down the global economy.
Analysts have come out with various estimates about the likely economic impact of the pandemic. Let’s just say things don’t look very good at the moment.
Global economy hit by worst shock since 1930s
As fears of a global recession loom amid the rapidly spreading coronavirus pandemic, how does the current economic slump compare against ones in the past?
While official data is yet to arrive, Reuters offers a guesstimate:
“There are no government statistics yet on the scale of the current downturn, but taking the oil industry as a proxy for economic demand, consumption appears to have fallen by around 10 million barrels per day, or 10%, within the space of a single month.
The first-round shock to the system is enormous even before any second and third-round impact on business and consumer spending.
In 1945, demobilisation and the conversion from wartime to peacetime production caused industrial output to drop by 30-35% progressively over 12 months.
In the 1974/75 recession, U.S. industrial output fell by around 15% over roughly 20 months, according to data from the Federal Reserve.
In 2008/09, U.S. industrial output declined by almost 20% from its pre-recession peak, but the decline was stretched over a period of roughly 18 months.
But the current downturn could easily prove the steepest since 1945. In scale and sudden onset, it looks more like the dynamics of the 1930s Depression or the violent business busts of the late 19th and early 20th centuries.”
India’s retail sector hit hard by coronavirus shutdown
The shutdown imposed by the government to slow the spread of the coronavirus pandemic has affected businesses across the board as consumers refuse to step out of their homes.
Reuters reports on the current state of India’s retail sector: “The coronavirus pandemic amid an economic slowdown has hit revenue at Indian retailers selling non essential items like clothes and jewelry by 75% so far and is likely to cause widespread job losses, an industry body said on Monday.
About 40% of the six million employees working in India’s modern, rather than traditional, retail sector could likely lose their jobs in the next four months if the government does not intervene, Kumar Rajgopalan, chief executive, Retailers Association of India (RAI), told Reuters.
“Unless the government provides some relief, revenues will slide by 90% in the next six months,” Rajgopalan said, suggesting moratoriums on the payment of loans, and on the payments of the goods and services tax (GST) and other government duties.
The RAI represents 500,000 stores in India, including brands like V-Mart, Shopper’s Stop, Future Group and Avenue Supermarts, which operates the grocery chain D-Mart.”
Coronavirus | Automakers to shut down manufacturing plants
Amid national efforts to curtail the spread of the novel coronavirus, nearly all automakers in the country, including market leaders Maruti Suzuki and Hero MotoCorp, have announced temporary shutdown of their manufacturing plants.
“With the safety and well-being of employees as top priority in view of the escalating COVID-19 situation, Hero MotoCorp has decided to halt operations at all its global manufacturing facilities — including in India, Colombia and Bangladesh — and the Global Parts Centre (GPC) at Neemrana with immediate effect until March 31, 2020,” the country’s largest two-wheeler manufacturer said in a statement.
(This story has not been edited by Kashmir Today staff and is published from a syndicated feed.)
