Economy: Corona Fallout

As the spread of COVID-19 chokes international trade, India’s tottering economy braces for yet another jolt

- M.G. Arun, Shwweta Punj & Anilesh S. Mahajan

Just as the war clouds in West Asia seemed to be receding, with the US toning down its tirade against Iran, calamity appeared on the horizon. As of March 11, the novel coronavirus—COVID-19—had infected 121,312 people in 120 nations and territories, with over 4,379 deaths reported worldwide. China, which saw 80,788 infected and 3,158 fatalities since the outbreak began in December 2019, has begun to see a lull in the incidence of the disease. But elsewhere, it is still on the rise. Korea has seen 7,755 cases, Italy 10,149, Germany 1,622, the US 1,016 and the UK, 383. India has seen 62 cases with no casualties reported yet. While the disease and deaths pose a huge social challenge to governments worldwide, the economic costs are already significant. On March 4, the United Nations Conference on Trade and Development (UNCTAD) said the slowdown in manufacturing in China owing to the COVID-19 outbreak would cause a $50 billion disruption in trade. It estimated the impact on India alone at $348 million (Rs 2,575 crore)—an enormous sum, but dwarfed by the $15.5 billion impact on the EU and the $5.7 billion hit on the US. However, Union finance minister Nirmala Sitharaman has said there is no need to panic about the economy, with PTI quoting her as saying that coronavirus will be a challenge for India only if the situation is not resolved within three weeks.