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How can the global economy survive Corona?

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Essay Contest for UPSC Exam for IAS

The entire world has stopped with a self-imposed lockdown conditions, the pollution levels came down, several migrants have slept with empty stomachs, most of the humanity have lost its dear ones, animals roamed freely of course with some man-animal conflict… thanks to the CORONA VIRUS induced COVID-19 PANDEMIC. Having origin at the Wuhan province of China, this virus now spread to the entire world, causing havoc like conditions, which the humanity have never experienced (at least for this generation) in its known history.

This pandemic has affected each & every sector of the economy ranging from agriculture to manufacturing to service sector. In a globalized & interconnected world the impact on one sector will spill over to other sectors as well. This can be observed from the crash of oil & natural gas industry as a result of standstill of transportation sector.

Economic shock of COVID – 19 pandemic is not just a demand shock but also a massive supply shock. As per the assessment of the International Monetary Fund (IMF), the global economy, due to this pandemic, is expected to shrink by over 3% in 2020 – the steepest slowdown since the Greatest Depression of 1930’s & the Global Financial Crisis of 2007-09 & as per the World Bank(WB) assessment the global unemployment rate will likely climb to its highest level since 1965.

Having seen the assessment reports of IMF & WB there arises a question… how the global economy survives this COVID pandemic? In order to rejuvenate the global economy, the economists have suggested various measures, some of which are as follows:

First one is the need to strengthen the health care system in all the countries with a good amount of their economy on Research & Development(R&D), health care infrastructure, medicine & vaccine. They also have to maintain proper doctor to population ratio as prescribed by World Health Organization (WHO) i.e., one doctor for every 1000 population. The covid-19 pandemic has revealed the kind of sorry state of healthcare system in most of the countries. This should be given at most importance.

“a healthy nation will contribute more to it’s economy”

Second one is the need to adopt sustainable development models. The covid pandemic have shown to the world the real culprit of climate change i.e., the human beings. This is proved in most of the countries with the reduction of pollution levels because of shutdown of most of the polluting sectors i.e., transportation, industrial sectors. Delhi has recorded low level of PM 2.5 in the recent decades !! Focus on green economy, circular economy, waste to energy, renewable energy, etc., should be the norm for the countries. More over they should abide by the Paris CoP-21 agreement on climate change. It’s the best opportunity to move towards sustainable development & strive to achieve SDG-2030.

” We are in danger of destroying ourselves by our greed & stupidity. We cannot remain looking inwards at ourselves on a small & increasingly polluted & overcrowded planet”

  • Stephen Hawking

Third one is focus on Micro, Small & Medium Enterprises (MSMEs), which are the growth engines & employment generators of any economy. By providing the necessary kind of support in terms of capital, raw material & regulations related to employment the governments can boost or rejuvenate the economy. At the same time, they have to ensure proper maintenance of sanitation, hygiene, & social distancing to avoid another outbreak of covid like disease. The announcement of stimulus packages like credit support through banks is a case in point.

The fourth & final one is focus on agriculture & allied activities in rural areas where social distancing norm can be followed easily. Since this sector will have greater employment potential in most of the emerging & under developed economies added with the reverse migration that happened during this pandemic (from urban to rural) there is a huge potential to make it more productive with some sustainable practices. This will help in the development of rural economy which used to contribute the most to the globe in this glocalised world.

Even though most of the economies announced stimulus packages to come out of this pandemic, like Japan has announced 21% of its GDP, USA- 13%, etc., the World Economic Forum(WEF) has noted “ there is concern that the size of packages may prove insufficient for the duration of the crisis; that disbursement may be slower than is needed; that not all firms in need would be targeted; & that such programs may be overly reliant on debt financing.” Hence, it’s the need of the hour to focus on above mentioned strategies as suggested by economists to revamp the global economy & tackle the future corona like viruses.

-G Naveen

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