Covid-19 to hit world economy

China put its economy into a self-induced coma to fight the virus. Now it’s slowly getting back to work, but economists warn that the second largest economy of world will struggle due to the impact of Covid-19. China’s GDP shrank by 6.8 percent for the first three months of the year – its first year-on-year contraction in decades, in fact, since records started. It’s a sign of how hard it will be to restart all economies of the world. The World Bank says that China will see growth fall to 2 percent this year from 6 percent last year – and if things get worse, it would see growth fall to 0.1 percent. That’s basically no growth. Whatever Beijing manages to eke out from now will not be enough for the rest of the world to hitch our wagons to in the hopes of a recovery.
For India, things look tougher. Rating agencies, both global and domestic, are unanimous that the Covid-19 pandemic will be an economic tsunami for India. Even though the country may not slip into a recession, unlike the Eurozone, the US, or Asia-Pacific that have stronger trade ties to China, analysts believe the impact on India’s GDP growth will be significant. India is currently in the midst of a lockdown that began on 25 March to contain the spread of the coronavirus. The fallout of the move will spill over to financial year 2021, which begins on 1 April. On 26 March, Finance Minister Nirmala Sitharaman announced a $23 billion package aimed at cushioning the disruption. The RBI has also announced some policies towards reviving the economy. But one wonders whether the steps being initiated by the government are enough. In India, the GDP growth is already at a decadal low and any further dent in economic output will bring more pain to workers who have seen their wages erode in recent times.