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Business Impact of Coronavirus on Indian and Global Economy

Coronavirus case was firstly reported in December 2019 in Wuhan, China which is currently is a big danger for the nations across the world. Already near about more than 3000 people have died globally with the virus COVID-19. Coronavirus is spread through virus COVID-19, which in other words, is also known as Severe Acute Respiratory Syndrome.  WHO (World Health Organisation) is also working closely with governments and health organizations to provide advice to the countries globally about the preventive and precautionary measures.

One cannot ignore the fact that the coronavirus has impacted the economy globally, which has presently slower the trade, supply chain disruption, commodities and logistics. In terms of trade, China is the world’s largest exporter and second-largest importer. It accounts for 13% of world exports and 11% of world imports. The lockdown is affecting around 500 million people in the country that has a deep impact on its consumption of goods by March 2020.  The business impact of coronavirus has also affected the economy of other countries as well.

Impact of the Coronavirus on Indian Economy

Indian industry is dependent upon China to a large extent. Almost top 20 products are imported to India from across the world. Particularly, in that case, China accounts for a significant share. Moreover, Indian electronic goods items account for 45% in China. Around 25% of fertilizers, 65 to 70% of the active pharmaceutical ingredients and 90% of the mobiles are imported from China to India. These figures have dropped-down largely, which has affected the Indian economy and slow the growth in the nation.

India’s economy is mostly affected by the 15 countries due to the coronavirus epidemic and it has slowed down the pace of production in China, with a trade impact of 348 million dollars. The trade/business impact of coronavirus for India is comparatively less to other economies such as EU, the US, Japan and South Korea. The most affected economies because of the coronavirus are the European Union (USD 15.6 billion), the United States (USD 5.8 billion), Japan (USD 5.2 billion), South Korea (USD 3.8 billion), Taiwan Province of China (USD 2.6 billion) and Vietnam ( USD 2.3 billion).

Other industries in which business impact of Coronavirus are as follows:

• Impact of coronavirus on Chemical industry: It was discovered that 20% of the production had been disrupted in raw material supply for the chemical industry. Currently, chemical plants have been shut down as now there are restrictions on the shipments and logistics.

• Impact of coronavirus on Shipping industry– Coronavirus has impacted the business of cargo movement service providers and shipping industry. Currently, per day per vessel has declined by more than 75-80% in dry bulk trade.

• Impact of coronavirus on Pharma industry– Due to the coronavirus outbreak, one of the top formulations of drug exporters in the world has also affected. The pharma industry of India relies heavily on import of bulk drugs.

• Impact of coronavirus on Electronic industry– The major supplier of electronics used in the Indian electronic industry is China. The electronic industry may face supply disruptions, production, reduction impact on product prices due to heavy dependence on electronics component supply directly or indirectly and local manufacturing because of Coronavirus outbreak.

• Impact of coronavirus on Tourism and Aviation– The tourists inflow from China and other East Asian regions to India has also stopped from visiting which has impacted the tourism sector and the revenues generated from it.

• Impact of the coronavirus on IT industry– The extended new year holidays earlier in China because of the outbreak of coronavirus has increased the adverse impact on the IT sector as well. The revenue and growth of the Indian IT companies as continuing to slow down in the growth.

• Impact of the coronavirus on Textile industry– The textile industry has been affected as factories in China has halted operations that in turn affected the exports of fabric, yarn and other raw materials to India because of the coronavirus outbreak.

Overall impact of Coronavirus in the World Economy

The business impact of coronavirus is hitting the world economy very fast from the past two months. The outbreak of this disease has yet no cure but still, precautionary measures have to be taken.  There are some brief points which could be seen after the effect of coronavirus to the world at large, and they are as below:

OECD downgrades growth forecasts– According to the Organisation for Economic Cooperation and Development, the world economy could grow at the lowest rates due to coronavirus outbreak. The fall in the economy is half the GDP growth rate since Nov 2019.

Coronavirus impact on stock markets– European and US stock markets have to keep on degrading their stocks, as it has been hoped that countries will intervene to protect economies from the coronavirus outbreak. 

Pollution decreases– The outburst of the coronavirus in the country like China has shut all the businesses, offices and various centres to fight against the coronavirus. The current NASA satellite images show the clear pollution atmosphere in the nation. No people are allowed to come out from their homes in any circumstances.

Less business less import and export- Trade-in China and all other parts of the world is decreasing because of the communicable disease. The shipments are returned or delayed as per the safety measures.

Countries travel restrictions– The countries like UK, USA, India etc. have issued restrictions on receiving the passengers from the province in China, Italy and Iran especially. The alert is again made on the precautionary grounds. However, this has massively impacted the travel industry as airlines cutting flights and cancelling trips for tourist and other business trips.  

Conclusion

The IT sector traditionally had minimal exposure to China with the bulk of their revenues coming from the US, UK and Europe. Also, the Coronavirus crisis led to the increased risk of investing by global investors resulting in the rupee weakening. Banks also corrected sharply fearing that lower GDP growth meant lower income levels, and hence repayment capacity would get impacted. However, this is hoped to that coronavirus impact is sooner or later will be lessened but things will take some time to get back to normal.

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