Impact of Covid-19 on Global Relations and Economy

It has been three months since the Chinese president Xi Jinping declared about the Coronavirus outbreak. It has affected every aspect of the normal life of people from transportation, leisure to retailing network.  Reports are showing that various schools, colleges, and factories are shut down because of this outbreak. Millions of people have been affected because this virus impact and it is expected to show its considerable impact on the global economy in the first quarter of the year 2020.  There is the possibility of crashing down of the stock market because the investor is too worried about the coronavirus impact on their portfolios. The stock market can be revived only if this virus can be managed effectively as soon as possible. The longer the virus is out and affecting the regions worldwide, the greater the impacts will be on corporate earnings.  The sooner it is under control, the sooner the economy will snap back.  The most affected sector is international aviation.  International air travel is widely affected because many countries have canceled flights to China.  Tourist flow to China has been disrupted which is affecting China’s revenue from the tourist sector. The other sector which has been hit hard is the retail sector. This is because the factories are shut down and workers are not returning from the Chinese New Year. This is resulting in the drying up of supplies and raised prices. The sale of luxury goods and the automobile sector has also been hit hard because of the quarantining of the tens of millions of people. There are serious which need to be considered that why it took 40 days for Chinese President Xi Jinping for the recognition of the first case of Corona-Virus in the Wuhan Province. Why so many doctors were punished who wanted to warn about the deadly virus, why they were planning new events up until the virus declared as an urgent emergency. Other questions that need to be pondered upon are the lack of preparedness of the public authority. This case also showcased the illegal animal market which was not following safety regulations properly. When it became clear that the new virus had hatched and it is going to become a world emergency, the various authorities went into crisis mode. But this passing of information took so long that it speaks of a political party problem, which is so obsessed with power, stability, and control that it did not think once before suppressing the free flow of information and transparency. It is a matter of concern for the western policymakers and business leaders who are concerned about China’s management of health security and economic policy.  China has a very high level of integration into the global economy. It is integrated with various sectors such as health, transport, tourism, supply chains and all other forms of commerce.  There was a saying that when the US economy caught flu, the whole world gets sick, now it is true for china also, literally. Moreover, this year can be said as the bruising year for China, as its economy was expanding at its slowest pace in the last thirty years because of its trade war with the US. Economists are estimating that 4 million jobs have been lost in 2019 and this year is equally bad because of the virus outbreak.  The total number of reported coronavirus case is 80,026.  In an emergency statement because of the outbreak of the virus, the government of Japan has signaled that it will inject liquidity into markets and hinted at greater asset purchases. The governor of Central bank, Haruhiko Kuroda said that “The bank of Japan will closely monitor future developments, and will strive to provide ample liquidity and ensure stability in financial markets through appropriate market operations and asset purchase.”  The export orders of South Korea have fallen at their fastest pace in the last six years as manufacturers shut productions and factories as a result of the virus outbreak.  An economist at IHS Markit, Joe Hayes said that “The south Korean manufacturing sector was hit by a dual-prolonged negative shock to the demand and supply side of the economy amid the Covid-19 outbreak.” Various countries have suspended visa on arrival from the nations which are affected by this outbreak of virus.  

The head of the International Monetary Fund (IMF ) said that the lender of last resort is going to give funds and additional support to the poorest countries in order to help these countries struck by coronavirus.  It has been reported that more than 76,000 people in 27 countries have infected by this virus which started in the Wuhan Province of china and 2,200 people have died till now because of this virus.  The International Air Transport Association (IATA), a trade body for the global aviation industry has said that because of the falling demand of the passengers, the airline industry will have a loss of about $ 29.3 bn this year with global travel is expected to fall to its lowest in last 10 years. The biggest problem these days in global politics is the lack of trust and hostility. Many believe that a more authoritarian China with its one-man rule will nurture the very Instability and unpredictability it was created to counter. The global economy and globalization will be deeply affected because of this corona outbreak. It has already started to show its impact by crashing down of the stock market, shutting down of manufacturing unit in the world second’s biggest economy, loss of revenue in the aviation sector and various precautionary measures which are being taken for topping the outbreak of the virus.

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