Page 32 - Banking Finance May 2020

ARTICLE
ARTICLE
Corona Impact on

Economy
If we speak about our Economy,
recently, we have been facing
rough times and abrupt advent
of Covid19 has further amplified
the negative sentiment, such as

~$180Bn of annual exports
and imports are linked to
highly exposed countries –
US, Europe, UK, Iran. Off
late, Trump and Modi were
discussing certain
measures, which would
Outbreak of Corona have increased the trade between the two, now the
The novel Corona outbreak took place in China’s wet same is put to halt.
market, Wuhan. By December, the virus had expanded and 25% of India’s workforce, are casual labour; facing the
touched every corner of the globe. Looking at the alarming direct impact of lockdown
levels of spread and severity, World Health Organization Auto, Travel, Consumer Durables, Construction are
declared Covid-19 has global risk which required immediate facing the downside. The discretionary spending on any
health emergency. fashion and luxury goods, shall be getting the hit, as the

spending power shall be conservative in near future.
Looking from health perspective, India has done a
commendable job by initiating the Lockdown on 25th March However, every cloud has a silver lining.
to contain the spread. India has learnt from its global peers,
and called out for lockdown at an early stage of outbreak. Given the ambiguity in current situation, it is difficult to
With a population of ~1.38 billion, India has reported 396 develop opinion and quantifying economic impact. Yet, we
deaths (15th April, 2020). India is reporting 0.3 deaths/ have tried to focus on positive key parameters among the
million as compared to 79 deaths/million in USA. sea of negative sentiments. Imposing lockdown at an early
stage, has given Indian economy a ray of hope and
saved us from a disaster. Let us look at the
following factors –

Opportunity Ahead
US-China relationship has become more toxic,
between the trade war and Coronavirus.
International firms have figured it in a hard way,
how vulnerable their globally integrated supply
chains are. This has prompt international
businesses to think about diversification of their
production across numerous nations. This should
benefit India in the medium term, as firms would
want to bank less on China as their lone
manufacturing hub. Hence, we expect a moderate
rebound of economic growth in 2021 and beyond.

32 | 2020 | MAY | BANKING FINANCE