INTRODUCTION
COVID Pandemic has shifted the gears of the world economy for ever. Right now, definitely in the reverse direction. The consequences of this crisis will boomerang on the overall prosperity and well-being of the humanity in a verse possible manner. The International Monetary Fund predicts that the deficit-to-GDP ratio in advanced economies will swell from 3.3 percent in 2019 to 16.6 percent this year, and in emerging markets, it will go from 4.9 percent to 10.6 percent over the same period. Many developing countries are following the lead of their developed counterparts in opening up the fiscal tap. But among both advanced and developing economies, many governments lack the fiscal space to do so. The result is multiple overextended government balance sheets.
DISASTROUS CONSEQUENCES OF PANDEMIC
Dealing with the accruing debt will hinder rebuilding of the world. The G-20 has already postponed debt-service payments for 76 of the poorest countries. Wealthier governments and lending institutions will have to do more in the coming months, incorporating other economies into their debt-relief schemes and involving the private sector. But the political will to undertake these measures may well be lacking if countries decide to turn inward rather than prop up the global economy.
It’s still a matter of investigation and assertion, the villainous role of China in this Global recession though there are irrefutable indications that China underplayed the gravity of the Pandemic in its initial stages and clandestinely asserted its political influence on World Health Organization (WHO) , and hoodwinked the world nations to sleep over the looming economic and social crisis situation. It’s prudent that the United Nations should initiate a thorough legitimate investigation through its World Court, to pin-point responsibility over this human tragedy almost akin to a third World War, using bio weapons which had killed more than a million people already in the world. Its matter of grave concern and mystery that lakhs of virus infected Chinese tourists travelled to destination all across the globe from Wuhan, the epee-center of Covid virus, when domestic flights going out of Wuhan were banned by the Chinese government, as pointed out by US President Donald Trump. If found guilty on this count , China should be brought before the World Court, condemned for Genocide and inhuman crime against humanity as War Criminals like the Nazis of Hitler’s Germany, who massacred millions of innocent Jews during the dark ages of World War II. Proven guilt of such grave crimes China should be boycotted by the entire world nations and dismissed out of United Nations (UN).
Globalization was first thrown into reverse mobility with the arrival of the Trump administration in 2016. The speed of the unwinding will only pick up as blame is assigned for the current mess. Open borders seem to facilitate the spread of infection. A reliance on export markets appears to drag a domestic economy down when the volume of global trade dwindles. Many emerging markets have seen the prices of their major commodities collapse and remittances from their citizens abroad plummet. Public sentiment matters to the economy, and it is hard to imagine that attitudes toward foreign travel or education abroad will rally quickly. More generally, trust—a key lubricant for market transactions—is in short supply internationally. Many borders will be difficult to cross, and doubts about the reliability of some foreign partners will fester.
Yet another reason why global cooperation may falter is that policymakers may confuse the short-term rebound with a lasting recovery. Stopping the slide in incomes and output is a critical accomplishment, but so, too, will be hastening the recovery. The longer it takes to climb out of the hole this pandemic punched in the global economy, the longer some people will be unnecessarily out of work and the more likely medium- and longer-term growth prospects will be permanently impaired.
The shadow of this crisis will be long and dark—more so than those of many of the prior ones.
The economic consequences are straightforward. As future income decreases, debt burdens become more onerous. The social consequences are harder to predict. A market economy involves a bargain among its citizens: resources will be put to their most efficient use to make the economic pie as large as possible and to increase the chance that it grows over time. When circumstances change as a result of technological advances or the opening of international trade routes, resources shift, creating winners and losers. As long as the pie is expanding rapidly, the losers can take comfort in the fact that the absolute size of their slice is still growing. For example, real GDP growth of four percent per year, the norm among advanced economies late last century, implies a doubling of output in 18 years. If growth is one percent, the level that prevailed in the shadow of the 2008–9 recession, the time it takes to double output stretches to 72 years. With the current costs evident and the benefits receding into a more distant horizon, people may begin to rethink the market bargain.
The historian Henry Adams once noted that politics is about the systematic organization of hatreds. Voters who have lost their jobs, have seen their businesses close, and have depleted their savings are angry. There is no guarantee that this anger will be channelled in a productive direction by the current political class—or by the ones to follow if the politicians in power are voted out. A tide of populist nationalism often rises when the economy ebbs, so mistrust among the global community is almost sure to increase. This will speed the decline of multilateralism and may create a vicious cycle by further lowering future economic prospects. That is precisely what happened in between the two world wars, when nationalism and beggar-thy-neighbour policies flourished.
CONCLUSION
There is no one-size-fits-all solution to these political and social problems. But one prudent course of action is to prevent the economic conditions that produced these pressures from worsening. Officials need to press on with fiscal and monetary stimulus. And above all, they must refrain from confusing a rebound for a recovery.
Jai Hind