Economy and Investment During and After COVID-19

  In Blog

The intensity of the impact of COVID-19 on global economy will certainly exceed the intensity of the worst financial crisis the world has previously faced. As a result, there has been nearly complete disruption of trade activities. The markets are under a prolonged lockdown, and the revival, whenever it starts, will be slow and gradual.

Today, the first and foremost task for all developed as well as developing countries is to control the spreading of Corona virus and thereby pull down the mortality rate. Developing effective vaccines as well as remedies for this killer disease and making them available to the entire humanity is the next task. Consequently, the imposition of moratorium on production, sales and almost all commercial activities has become unavoidable.

Joint action required to revive economy

While vigorous activities are going on to control further spreading of the pandemic, various action programs are initiated to minimize the financial losses to countries, business organizations, manufacturing companies, traders, farmers and the ordinary people. As of late, there is a strong feeling among economists as well as business promoters that it is high time to start planning time-bound action programs to bring the economy back in the aftermath of the pandemic. The speed of this recovery and progress depends on the decisions that are being taken now. An action program that ensures maximum thrust to trade will ensure a rapid and earliest revival of the economy. We need more and more investments. We can attract investments only if the investors are convinced that the overall situation in the market is conducive to carry out business. All countries should come forward for a joint action to facilitate earlier recovery. They must keep the markets open and free of uncertainty. Nobody will dare to invest when the market is this unpredictable.

Revival may start by end 2020

Any forecast now on trade and economy will be based more on assumptions and less on recorded data. As far as trade during year 2020 as well as 2021 is concerned, predictions are more likely to go haywire. As a result of the restrictions on travel, tourism, transportation, manufacturing, hospitality sector and retail selling of non-essential items, the global economy as a whole has undergone the worst but unavoidable suppression. Before initiating various actions to revive economy and trade after COVID-19, we must be aware of the fact that the atmosphere of uncertainty and confusion may continue for few more months at least. This is because in the current scenario it is not practical to correctly predict the outcome of the various measures that are to be taken. The beginning of the post-Covid period can be devastating but, expectation of revival starting by the end of 2020 seems to be realistic. However, the time actually required to complete the recovery process can be much longer than the time anticipated.


Recession expected

In year 2020, global economy is expected to go down by 3% as anticipated by IMF. This could be a very severe blow the impact of which may be felt for a very long period. The various sectors of the economy which have been under lockdown are expected to resume operations shortly and economy activity will be in full fledge within the next few months. There is an expectation that in year 2021 world economy will register growth not less than 5.8%. Is this prediction realistic? The uncertainties prevent us from taking a firm conclusion. According to a report released by UNO, the Covid-19 pandemic will be pulling down global economy into recession, with India and China as possible exceptions.

Not the time for investments

Economic activity had been affected very badly following the outbreak of Covid-19 and markets are completely closed. In many countries there is practically no economic activity. When the future is too unpredictable, people are unable to take decisions regarding investments. The stock markets are in disarray and nobody would think about investing in a stock market that is sinking. According to investment experts, the year 2020 is unfortunately not the year for investments. Not only is this problem that we face very real and grave, it is also quite new. We have no previous experience of facing a pandemic of this magnitude. It would be wise to come out of this problem first, allow some time to pass, and decide our strategy accordingly as we begin to slowly move with caution.