With the global pandemic affecting economies throughout the globe its necessary to understand the scenario and paint a picture of the near future to handle it better
2. Overview
◦ Global Economy in the last 50 years
◦ Covid-19 Crisis
◦ Covid-19 Crisis: Indian Context
◦ Recession in the Loom
◦ Future of the Global Economy
3. Changes in the last 50 years
◦ More technology: Markets were dominated by manufacturers earlier, however the scenario
changed completely with tech firms dominating the market
◦ Welcoming migrant workers, due to availability of improved modes of transportation
◦ Increased capitalism, which ultimately increased gap between the rich and the poor; where half
the world’s population owns less than 1% of all wealth
◦ Rapid growth of the developing countries like India, Bangladesh, Philippines led to popularization
of MNCs and outsourcing of jobs
◦ Shift of focus from shareholders interest to stakeholder’s interest to create ecological value.
4. Covid-19 Crisis, 2020
◦ Covid-19, popularly known as Coronavirus, led to a pandemic in early 2020 is causing major
disruptions on the global economic spectrum
◦ China, the place origin of the pathogen was the first to bear the brunt where lock downs where
imposed to contain the spread of the virus, leading to the shut down of its production units
◦ China also imposed bans on movement of people as well as goods and services across its border
◦ With almost two thirds of the world dependent on China’s manufacturing units, the lockdowns
led to an unprecedented crippling of the global economy following the disruptions in the supply
chain
◦ However, due to lack of timely action by the Chinese government, the lockdowns couldn’t
contain the spread of the virus across its borders. It spread to almost all nations.
5. Covid-19 Crisis, 2020: Indian Context
◦ The Covid-19 crisis in India emerged in March, 2020 with the first case being detected in Kerala, a
patient having history of international travel
◦ In a very short span of time the no. of cases increased exponentially.
◦ This led to the government promoting social distancing and hygiene related awareness
programmes
◦ However, it wasn’t enough and drastic measures such as sudden lockdowns and curfew were
imposed across the nation leading to shut down of all corporates and business apart from those
involved in essential services
◦ This led to a humanitarian crisis of migrant and daily wage workers stranded away from homes
migrating back to their native places.
6. Recession in the Loom
◦ With majority of the companies shutting shop, layoffs are inevitable
◦ Factories and production lines are working with almost half the labour strength and reduced
capacity at the same expenses, which will lead to increase of costs
◦ Fall in demand of non essential product and services such as tourism, airlines, and entertainment
sectors are the first to see the effects, while others will follow suit very soon
◦ The volatile stock market is at all time lows and trades are halted; due to pessimistic behavior of
investors
◦ This will affect the country’s GDP with experts predicting negative growth in the 1st quarter of
FY20-21
7. Recession in the Loom
◦ Due to the shut down of manufacturing units, their distributors and suppliers of raw materials
will also face the unavoidable losses
◦ The reduced demand from raw materials suppliers will affect the mining units which in turn
contributes directly to the country’s income
◦ Construction Sector, the sector which provides the second highest no of jobs are shut down
which left a huge impact on the daily wage workers and also the Real Estate sector
8. Future of the Global Economy
◦ The depression to be faced in the near future is expected to be the greatest depression in the last
100-150 years
◦ The global economy will see a lot of changes in the near future. Countries taking more
consumption oriented approach than export oriented approach
◦ Such approach will affect the shipping industry, a derived demand
◦ The FMCG sector is expected to grow at a steady rate, however difficulties faced due to disrupted
supply chains will create a gap between the supply and demand, leading to increased costs
◦ The governments will provide revival packages to boost the economy by liquidity injections, cut in
interest rates and decreasing cash reserve ratios
9. Future of the Global Economy
◦ Loan waivers and Relief packages to the MSMEs which are severely affected by the crisis
◦ The relief measures taken by the government will increase the government expenditures and
increase the Fiscal Deficit
◦ Boosting rural demand will still be a challenge as expenses other than essentials would be totally
absent in the rural areas
◦ The pharma and healthcare sector would see a growth for a short period with technological
advancement in the sector
◦ Unemployment rates are expected to rise at an alarming rate
◦ Nationalistic approach will be more popular than globalization
◦ The recovery will be at a slower rate than it has been in the near past. This is due to the severe
impacts of the continued lockdown