Spiral Engagement of

Covid-19

and Changing Global Outlook

Mehtab Ali Bhatti

In December last year, a new kind of virus which started to emerge in Wuhan, a city in Hubei province of the People’s Republic of China, has now become a maelstrom for entire planet. Those individuals, who were taking the Covid-19 pandemic as venial, trusting in the misguided judgement that they will contain this, are now in unequivocal shock and awe. As of May 10, it has devoured around 300,000 human lives and many countries are still under lockdown bringing life to a halt. Humans are being affected at large scale and global economy, too, is facing a looming recession. 

 

At present, there is no smart treatment available to combat this virus. The Covid-19 pandemic is profoundly infectious as it spreads from person to person through the air and a touch by the virus-infected person.

The intense suffering caused by this pandemic are not simply faced by the developing or the underdeveloped nations, developed nations, too, are facing the wrath of coronavirus. However, two countries—South Korea and Singapore—took intelligent, timely measures and they successfully contained the spread of the killer disease. However, many Western countries like the United States, United Kingdom, Italy, Spain, and France have been dreadfullu unable to control the spread of Covid-19.

After 9/11 and financial crisis of 2008-09, the coronavirus pandemic has dealt a third fatal shock to the world economy in the 21^st century. Take the example of China’s economy, which happens to be the world’s second biggest. The Covid-19 has caused a decline of 20% in just first 60 days of 2020 and the country’s exports fell by as much as 17%. By March, manufacturing sector and automobiles sales have nosedived by a new low record of 80%.

As indicated by the United Nations Industrial Development Organization (UNIDO), the Covid-19 epidemic has affected the demand and supply system. From the perspective of supply, work diminished in numbers because of the disease as workers can’t work at factories and industrial units and this upsets the supply chain. In addition, the virus has brought all activities to a standstill in regions on which big firms of developed nations rely to get the raw material and other parts.

On the demand side, measures like social distancing and staying at home have diminished the propensity to consume. Manufacturing companies are facing huge difficulties in marketing their products as there is no demand for them ni the present circumstances.

International financial institutions, like JP Morgan, Goldman Sachs and Morgan Stanley, have estimated that America’s annual GDP may see a 6% decline in the first quarter and between 20% and 30% in the second quarter of the ongoing fiscal year. The US Treasury Secretary, Steven Mnuchin, has warned that merciless reflection of the pandemic could hit twice the global financial crisis—up to 30%.

The Organization for Economic Cooperation and Development (OECD) has reported that the Covid-19 might slash the global GDP growth rate of the year 2020 from 2.9% to 2.4%.

In addressing the Covid-19 pandemic, as many as 185 governments in the world have imposed lockdowns and have issued stay-at-home orders for the people. Travel, tourism and entertainment industries have also borne a severe financial brunt of the pandemic. It is estimated that international airlines could suffer a loss of between $60 billion and $115 billion.

The Covid-19 has changed our lives in ways that will leave a perpetual imprint on the future humankind. While it is difficult to foresee the specific kind of scars that the pandemic will leave, there is no doubt that the post-Covid-19 world will be different altogether.

There are four possible ways the world will look different from the pre-pandemic era:

1. A huge economic recession seems imminent. With nations going into lockdown and small businesses shut down, we are witnessing a steep economic decline all over the world. Rise in unemployment and poverty has effected a decrease in average incomes. What is more stressing is that the economic impact of Covid-19 will be more profound for developing nations like Pakistan, Sri Lanka and Bangladesh. Unfortunately, they don’t have the financial space to bail out their workers, who have been forced to stay at home, for long. Owing to economic compulsions, these countries will have no choice but to lift the lockdown and open up at least some, if not all, sectors of their economies. But what may happen when the lockdown is lifted is anybody’s guess. It is feared that these nations will have to bear a greater cost in the form of human lives as well.
2. The state power has been used in exceptional ways across the world and it will surely have consequences on how governments work in post-coronavirus era. For example, in East Asia, worries about data protection have been ignored to cope with the infection. The data that has been, and is being, used to curb the spread of the pandemic, can be utilized for other detestable purposes. All things considered, governments in the post-Covid-19 world will be influential and more imposing in terms of power.
3. Worldwide trade and globalization may also face a crisis. In such circumstance, when the governments scared by the spread if the disease have chosen to repudiate certain factors of globalization and exchange, the future of global connectivity seems bleak.
4. Covid-19 may shift the power paradigm from the Western hemisphere to the Eastern hemisphere. Power transference in the world order is probably not going to happen rapidly, yet the Covid-19 emergency can go about as an intense impetus to this procedure. The current situation has called attention to the viability of nations like China, South Korea, Taiwan, and Singapore in curbing the pandemic, even when these nations had less reaction time as compared to that the Western countries had.

In case of Pakistan, the Covid-19 spread through foreign travellers, mostly those coming from the Middle East and Europe—mainly from Iran and Italy. The only conventional pragmatism for the people is to practice social distancing which, in our case, can be feasible only through a strict lockdown. Otherwise, there will be huge loss of lives besides an incredible economic cost.

Pakistan Institute of Development Economics has estimated that unemployment will be exponentially high and the country will bear over 2.4% annual GDP decline in the wake of Covid-19. According to the World Bank estimations, Pakistan may see economic recession in multiple sectors and losses of Rs1.3 trillion, which would be a huge blowback for GDP growth.

It is now on our economic managers and policymakers to carve out pragmatic policies that are based on ground realities to deal with the aftershocks of the Covid-19.

The author is an undergraduate student at

Strategic Studies Department, National Defence University, Islamabad