{"id":6430,"date":"2020-02-21T17:44:36","date_gmt":"2020-02-21T12:14:36","guid":{"rendered":"https:\/\/triumphias.com\/blog\/?p=6430"},"modified":"2020-02-21T17:46:15","modified_gmt":"2020-02-21T12:16:15","slug":"effects-of-covid-19-on-economic-slowdown","status":"publish","type":"post","link":"https:\/\/triumphias.com\/blog\/effects-of-covid-19-on-economic-slowdown\/","title":{"rendered":"Effects of COVID-19 on economic slowdown"},"content":{"rendered":"<p><span style=\"color: #0000ff;\"><strong>Relevance: Prelims\/Mains: G.S paper III: Economy<\/strong><\/span><\/p>\n<p><a href=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5.jpg\"><img loading=\"lazy\" decoding=\"async\" class=\"aligncenter size-large wp-image-6431\" src=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-1024x768.jpg\" alt=\"\" width=\"810\" height=\"608\" srcset=\"https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-1024x768.jpg 1024w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-150x113.jpg 150w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-300x225.jpg 300w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-768x576.jpg 768w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5-880x660.jpg 880w, https:\/\/triumphias.com\/blog\/wp-content\/uploads\/2020\/02\/coronavirus-5.jpg 1200w\" sizes=\"auto, (max-width: 810px) 100vw, 810px\" \/><\/a><\/p>\n<p><span style=\"color: #ff0000;\"><strong>Context:<\/strong><\/span><\/p>\n<ul>\n<li>China and other nations scramble to contain the spiralling human costs from COVID-19 infections with travel restrictions and lockdowns,<br \/>\n\u2022 It is becoming increasingly evident that this outbreak is likely to extract a more severe toll on the global economy than the SARS outbreak.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>Major implications of Global GDP:<\/strong><\/span><\/p>\n<ul>\n<li>Global forecasters, earlier predicting a single-quarter blip in China\u2019s growth and a V-shaped recovery, are now beginning to examine worst-case scenarios where the economy could contract and recover sluggishly thereafter.<br \/>\n\u2022 Current expectations are for the outbreak to trim global GDP growth by 0.2-0.3 percentage points, but that\u2019s predicated on key Chinese business hubs restarting operations this month.<br \/>\n\u2022 COVID-19 attack coinciding with the Chinese Lunar New Year has prolonged its impact, China\u2019s growing clout in the world has magnified it.<br \/>\n\u2022 Between the SARS outbreak and now, China has increased its contribution to global GDP to 16 per cent, grabbed 13 per cent of merchandise exports, and demands a third of the global output of cars, computers and luxury goods.<br \/>\n\u2022 First-order impacts from Chinese tourist cancellations are already being felt by the global airline and hospitality industries.<br \/>\n\u2022 Second-order impacts are harder to gauge, given that China is a critical cog in the global supply chain, functioning both as a manufacturing hub for Western consumer giants and a transit point for Eastern export powerhouses.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>Implications on India:<\/strong><\/span><\/p>\n<ul>\n<li>India Inc, after initially exulting over export opportunities opening up due to China\u2019s shutdown, is now beginning to fret about production-line disruptions should the shutdown continue.<br \/>\n\u2022 A leading car-maker has warned that the shortage of auto parts could impede the BS-VI transition, while a two-wheeler maker has indicated a 10 per cent production cut.<br \/>\n\u2022 The shut-down has exposed a major chink in the armour of Make in India:<br \/>\n\u2022 The high China dependence of India\u2019s electronics manufacturing, which is said to import over 60 per cent of its components from China.<br \/>\n\u2022 Tirupur\u2019s MSME garment exporters are worried about disrupted supplies of blended fabric and accessories while pharma firms, depending on China for 70 per cent of their active ingredients, have seen shortages spark price spirals in widely used drugs.<br \/>\n\u2022 One bright spot for India Inc lies in the 10-15 per cent decline in global oil and metal prices since the outbreak, but cost savings will provide cold comfort if supply disruptions force production cuts.<\/li>\n<\/ul>\n<p><span style=\"color: #ff0000;\"><strong>Way ahead:<\/strong><\/span><\/p>\n<ul>\n<li>The immediate imperative is to contain the consumer impact of this disruption on essential goods such as medicines, through proactive interventions that line up alternative supplies and curb profiteering.<br \/>\n\u2022 The Centre, which has been pointing to green shoots in IIP and services, may need to recognise that COVID-19 can prolong the slowdown.<br \/>\n\u2022 It also needs to take stock of India\u2019s import basket to identify key items with excessive single-origin dependence, to diversify the sources of supply.<br \/>\n\u2022 For India Inc, this calamity is an object lesson that cutting corners on local value addition and over-relying on supplies from a single source based on cost considerations alone, is no way to de-risk operations against Black Swan events.<\/li>\n<\/ul>\n<p>&nbsp;<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Relevance: Prelims\/Mains: G.S paper III: Economy Context: China and other nations scramble to contain the spiralling human costs from COVID-19<\/p>\n","protected":false},"author":1,"featured_media":3247,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_exactmetrics_skip_tracking":false,"_exactmetrics_sitenote_active":false,"_exactmetrics_sitenote_note":"","_exactmetrics_sitenote_category":0,"footnotes":""},"categories":[123,42,43],"tags":[392],"class_list":["post-6430","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs","category-general-studies-iii-technology-economic-development-bio-diversity-environment-security-and-disaster-management","category-indian-economy","tag-union-public-service-commission-upsc"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6430","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/comments?post=6430"}],"version-history":[{"count":1,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6430\/revisions"}],"predecessor-version":[{"id":6432,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/posts\/6430\/revisions\/6432"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media\/3247"}],"wp:attachment":[{"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/media?parent=6430"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/categories?post=6430"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/triumphias.com\/blog\/wp-json\/wp\/v2\/tags?post=6430"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}