Moving towards Great Depression in 2020
Most of us heard about the Great Depression period in 1930’s. The causes of this effect were fall of stock market in US stock exchange due to panic in general public for liquidity. Initially, people were purchasing stock by cash or even borrowing from bank, when the market reached to it extreme hike, investors were transformed to harvest the gain which at last resulted as great depression. It was continued for 10 years approx world GDP crashed down to 30%. Again it was happened in 2008-09, when world economy fall about 5%.
After 10 years, the world economy is facing the same situation, this time not from financial market but from a Virus. Here, I am talking about COVID-19 commonly known Corona Virus. It was spread from China and now spread globally. There are 140 countries, 125048 confirmed cases 3173 death world (source: WHO.int 16/03/2020)
London Index was fall approx 30% in a month, similarly crude oil rate come down from $69 to $ 60 per barrel . As per CNBC the effect of virus in economy of major trading counties with world is decreasing.
As per the Larry Elliott, author of the Guardian magazine, Paul Dales, the chief UK economist at Capital Economics, has estimated that output in Britain will shrink by 2.5% in the second quarter but says a 5% fall is possible. Tourism industry is suffering a major crisis, Italy, Spain, India and other countries having tourism as a one of the major source of revenue are suffering.
India’s total trade import are from China approx 18%(CRISIL 2020). Due to the virus attack the trade deficit of Rs $159 billion, items like Electronics, Consumer Durable products, Pharma sectors are most effected (economic times, 2020)
As per WTTC ( World Travel and Tourism Council) approx 50 million people loss their job due to this infection, Asia is worst effected and more than 6 month will take to recover. Tourism industry’s contribute 10% of global GDP. Only in Europe and United State around 8.5 lac people travel every month which creates $3.4 billion revenue (World Economic Forum)
Similarly, trade fairs all over the world also effected which finally cost the organization, in Geneva Motor Show by BMW has cancelled. It would expected to generate around $250 million. Germany also famous for trade fairs approx 160 to 180 fair are held every year, which generates $16 billion, with a source of 230000 jobs all are cancelled due to this virus (Abc News). Same condition in Chicago, fair organized by International Housewares Association assume to attack 56 k visitors with 47 k night booking in hotel.
Tournaments are postpone, it seems that Olympic 2020, which is going to held in Japan also having dark clouds. It is not the first time for Japan, in 1940 due to World War II.
It very clear that this is a virtual war like situation, people are scared from infection also to loss their business / jobs. Restaurants are empty, Mall closed, institution and even worship places also shutted down. India, is not in the situation to afford this situation, we have 135 cr population, but lack of testing centres for Corona Virus. In Dec 2019 – Jan 2020, huge public property were destroyed for the protest against CAA.
If this will continue for next month, loss of job will increased, due to lack of income , payment of debt will effect. Loss of job can increases anti social activities. Due to non availability of daily need items inflations will increase worldwide.
Better to keep hygiene, take precaution and don’t panic.