Due to the increasing impact of coronavirus, nearly 100 countries worldwide have closed their national borders last month. This has severely affected tourism globally. There is little hope of recovery in China’s economy, but there is still uncertainty ahead and its growth rate may be very low in 2020 with millions of jobs also being threatened. This year, the world’s second-largest economy, China’s gross domestic product (GDP) growth rate can be up to 1 or 2 percent, which was above 6 percent in 2019.
However, the World Bank had said last week that in the worst case, china’s economy of about $ 14 trillion may not grow this year. This situation of China will be the worst in the last 44 years and also worse than the economic recession of 1990 and 2008-09. UBS and Goldman Sachs had recently reduced China’s growth rate to 1.5 and 3 percent this year. On Tuesday, China’s cabinet announced additional financial support of more than $ 423 billion to support small businesses. It is expected to benefit 67 million people.
Global economy may decline by 1% in 2020
The United Nations (UN) said that due to the coronavirus epidemic, the global economy could shrink to one percent in 2020, reversing the previous forecast of 2.5 percent. In addition, the U.N. warns that it may further shrink if restrictions on economic activity are increased without adequate fiscal responses.
An analysis by the United Nations Department of Economic and Social Affairs (DESA) states that the covid-19 epidemic is disrupting global supply chains and international trade. During the last one month, the movement of people and tourism has come to a standstill with the closure of national borders of about 100 countries.
“Millions of workers in these countries are facing the full possibility of losing their jobs. Governments are considering and announcing large stimulus packages to avoid entering into any potentially recessionary economy.” In the worst-case scenario, the global economy could shrink to 0.9 percent in the year 2020. It is also said that the global economy had shrunk to 1.7 percent be In 2009, due to the economic slowdown.
It states that if governments fail to provide income support and help boost consumer spending, shrinkage can be even greater. According to the world economic situation and outlook 2020, the global level of output before the breakout of covid-19 was estimated to be 2.5% in 2020. According to the United Nations DESA’s World Economic Estimates, 2020 will be a bad year for global growth due to the rapid changes in economic conditions. However, at best it may be that the slow growth in private consumption, investment and exports and increase in government spending could cause global growth of Group-7 countries and China to fall by 1.2 per cent in 2020.
Global output may increase at the rate of 0.9%
In the worst of times, global output can grow at a rate of 0.9 per cent, which was growing at 2.5 per cent in the year 2020. The severity of economic impact in large economies will depend to a large extent on two factors – the movement of people and the duration of restrictions on economic activity in major economies and the actual size and efficacy of fiscal responses to the crisis. Health spending is currently being prioritized to prevent the spread of the virus through a well-crafted fiscal stimulus package, and by reducing the possibility of a deep economic recession by providing income support to families most affected by the epidemic will also help.
Service sector severely affected by lockdown
The service sector is estimated to be severely affected by the lockdown in Europe and North America, particularly in industries that operate physically, including retail businesses, lasers and hospitality, recycling and traffic services. Such industries provide one-third of employment in the above economies. Due to this, unemployment will also increase rapidly in the coming days. Due to the rapid reduction in consumer spending in the European Union and the United Nations, imports of consumer goods from developing countries will decrease. Developing countries are mainly dependent on tourism and commodity exports. So far, more than 9.32 lakh cases of corona have been reported worldwide and more than 42,000 deaths have taken place.