Coronavirus disease (COVID-19) and the Economy
Asbin Ghimire and Sandip Pahari
Many things said and heard recently about the newly emerged Coronavirus. It is an infectious disease also known as COVID-19 caused by Coronavirus. This new virus and disease were unknown before the first outbreak began in Wuhan, China, in December 2019. COVID-19 is now emerged as a pandemic affecting 210 countries globally. Till date around 3.58 Million cases were confirmed and 251 thousands people have died due to the disease.
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The coronavirus (COVID-19) outbreak is likely to have long-lasting economic and social impacts of global proportions stemming from the direct and indirect effects of illness, the preventive behaviors of people and the transmission control policies of governments. Specifically, GDP projections have already been revised downward for most regions and countries, driven by shocks to both domestic demand and supply and sharp declines in the circulation of goods and services. During the first few months of the outbreak, governments around the world have been correctly focused on managing the spread of the disease, relying in many cases on stringent transmission control measures without placing a high weight on the current and future economic costs of these measures. As it becomes clear that the economic and social costs of the outbreak will be significant, governments are increasingly turning their attention to a broader set of policy interventions that can help mitigate such costs.
According to US Bureau of Labour more than 3.8 million people in US have filed for unemployment benefits in last six week. Similarly close to one million people in UK also applied for benefits in just two week at the end of March. Oil price drop at $ 20.59 per Barrel which was the lowest price of oil at 21 year. According to estimates from the International Labour Organization, nearly 25 million jobs could be lost worldwide as a result of the pandemic. In March, the OECD cut its forecast for global economic growth in 2020 from 2.9 percent to 2.4 percent, which would be the lowest level since the financial crisis a decade ago, warning that a prolonged and more intensive coronavirus epidemic could even halve this figure to a mere 1.5 percent.
To prevent the spread of virus, Nepal government had started the trend of lockdown from March 18th to till date. Nepal’s economy cannot remain isolated from domestic and global measures adopted to prevent the spread of coronavirus which will result on the hotel and restaurant, manufacturing and transportation sectors witnessing negative growth of 16.3 per cent, 1.1 per cent and 2.26 per cent respectively, in the current fiscal year. Along with the tourism and transportation sectors, the remittance sector is expected to be the worst hit by the pandemic according to CBS. The Bureau has projected that remittance share of the GDP will fall to 19.01 per cent in the current fiscal year. It will be the first time that its share has been dropped below 20 per cent of the GDP since fiscal year 2010-11. According to Bureau these projections have been made estimating extreme losses in the hotel, restaurant and international transportation sectors till the end of this fiscal year, while other sectors are expected to gradually resume from mid of May.
Nepal is also looking at a severe employment crisis as millions of Nepalese who are currently working in foreign lands return home after losing jobs as economies around the world go into recession. Over 1.5 million Nepalese are estimated to be working in Malaysia, Qatar, Saudi Arabia, the United Arab Emirates and Kuwait while 3 to 4 million Nepalese are estimated to be living and working in India, according to the Migration in Nepal Report prepared by the International Organization for Migration. At least 600,000 to 700,000 Nepalese are expected to return due to reduced job opportunities in abroad, as per an initial estimate by Department of Labor. As a result the inflow of remittance is expected to decrease by Rs 163 billion on this year. All of these economical activities dragged down the Nepal economic growth to four year low of 2.27 % in current fiscal year. CBS has projected the country’s per capita income to grow to $1,085 or Rs 127,466 this fiscal from $1,039 or Rs 118,623 in fiscal 2018-19. This may result in increasing on poverty rate which may last for several year.
The current concern is not only on managing the escalating cases and deaths of COVID-19 infected people but also planning for how to sustain the severely shrunk global economy. Many rich nations are projecting and adopting numerous measures to control the huge downfall of their country’s economy whereas Nepal is webbed with its never lasting game of political and social unrests. Even in this phase of doom, if we aren’t cognizant then not even god can save Nepal’s economy from collapsing from which the country takes decades to strike back to normal.
Asbin Ghimire, 7th Sem BPH Student, School of Health and Allied Sciences, Pokhara University
Email: [email protected], Cell No. +977-9860080199Sandip Pahari,Assistant Professor, School of Health and Allied Sciences, Pokhara University
Email: [email protected], Cell No. +977-9846261237
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