Friday, 24 April 2020

Economic Impacts of Corona virus in the South Asian Countries

The world is now more globalized. The rise and fall of a country can put pressure on the economy of other countries. Coronavirus has a negative impact on everything. The direct effects we can see are on the financial sectors (for example, the remittances, small business and ready-made garments sectors). Some economists suggest that an economic recession may occur across the different parts of the globe due to the coronavirus pandemic.

Development Impacts (Economic) of Coronavirus on the Economy of South Asian Nations

Productions: because of COVID 19, production and sales of products remain closed for a long time and there is a shortage of items and cash flow in the economy. Stock markets have become more volatile and the financial market shrinks. Investors need to manage risk in transactions of this volatile coronavirus share market. 

Most shops and markets are closed. Only shops with necessary foods and medicine are open but there is not enough transportation means to move. You may not get what you need even if you have money. 

Supply chain: at first, china has been affected by the coronavirus and now the whole world is in crisis. Due to the outbreaks of the coronavirus, the supply of the raw materials and other grains has become scarce in the market. Countries like India, Bangladesh also find it difficult to produce their finished products since they import a large amount of chemical from China. 

Price hike: the price of the essential goods is getting higher. Masks, hand washers, hand sanitizers are out of stock. Some countries also put a ban on the export of essential medicines and masks because of their needs. 

Remittance: people who have gone abroad to earn money and sent it (remittance) to their motherland are being sent to their country. Those who are in lockdown in foreign countries cannot work and send money because of the closure of everything overseas. Moreover, they are in trouble as they are spending money and they do not have income. In some cases, they are now expecting and getting money from their home country. It is a matter of sorrow that their family members are also unable to send money because of the shutdown. Both local and national economies are being damaged. 

RMG and other export-oriented business: Most export income of Bangladesh come from the ready-made garments industry. But at the present condition, previous purchase orders get cancelled continuously. As the demands fall, supply has to follow the trend. The owners and workers face tremendous losses. 

However, there is a big demand for PPE and masks but some factories don’t have proper machines and materials for such production. The garment workers are now dependent on the government help and volunteering organizations for assistance. 

Exportable goods and frozen foods like Shrimp, Crab, and fish are not exported. All perishable products will be rotten without proper transportation. 

Agriculture: cutting and harvesting rice and other crops need manpower and farmers. Due to the lockdown, farmers are unable to cut and harvest rice and other agricultural products. They cannot produce and sell to the market (all farm sub-sectors including livestock, poultry, fisheries and vegetables). The situation also forces them to be poorer. They may borrow money from NGOs or money lenders. They may become the victim of the credit system. Many types of vegetables and corps are not being sold and rotten. 

Transportation and communication: To resist community-level infections of COVID 19, travel restrictions have been placed in these countries. As per the direction of WHO, isolations and home quarantines are made mandatory for the people who came from foreign nations as the epidemic breaks out at a severe rate form China, USA, Italy, Spain and so on. As a result, companies that work with transportation and communication face great difficulty and they bear an unavoidable loss due to the coronavirus outbreaks. 

Entertainment business: Aeroplane, tourism and event management business suffer very much due to the corona virus. These organizations can’t sell their services. As a result, their lucrative packages are being wasted and they are in financial crisis. The debt burden of businessmen is increasing. The film industry faces a huge loss since cinemas have been shut down to avoid gatherings. 

Small businesses and startups: The Covid 19 creates hazardous consequences for the new businessmen. Since the newbies don’t have much experience and capital they will go bankrupt easily. The workforce of this sector is much vulnerable during this period since most of their employers are new and not covered by any sort of insurance. 

Employees in private sectors: employees in private sectors get less salary or no salaries these days. They don’t know what will come next. Some business owners also take advantages of the situation. 

Unemployment: The governments have initiated lockdown and many people have decided to stop the activities for being afraid of being infected and the spreading the virus. Stopping economic activities means stopping money circulation and development. Some companies are already cutting their employees. Part-time, contractual workers and freelancers are in the great dangers. 

Workers & Shopkeepers: because of the lockdown situation, day labourers, rickshaw pullers, garments workers and CNG drivers cannot find works through which they could earn their livelihood. Without earnings, they go home empty-handed. 

Since the shortage of supply and demand for goods, shopkeepers are going through a hard time. They are passing lazy time and finding nothing to do. 

The home maids and women garments become helpless as they don’t have any alternative work due to the outbreaks of covid 19. 

Rural economy and Informal sectorThere are differences between the urban and rural economy but they have a deep and close relationship. Informal sectors and small business should be carefully handled. Programmes like VGF, VGD, Food for Work, and selling rice at the lowest price should be continued. 

Inflation: limited business, less production and price hike make the situation worse. A high risk of inflation all over the country will have arisen. Some governments of the South Asian countries are trying to print currencies but it also increases the chances of more inflation. 

Demand-side: As mass people have limited resources, they can buy fewer items. If people buy less, it may also lead to an economic recession. Supply of the products and business will be declined if demand dwindles. Many people may go hungry and face malnutrition. In some cases, dairy farmers dump milk because they cannot get the minimal price for sale. 

Taxes: As the economy shrinks, the government is falling far behind economically. Governments cannot collect or get taxes on time. COVID 19 creates a vicious cycle. If the government does not possess money, it cannot provide service properly to the people. 

Ultra poor and beggars: Beggars are dependent on money and donation of people. As all types of mass transportation are closed, they cannot find their helpers or well-wishers. Providing relief in the remote area has become a challenging task. 

Share your opinion on the Impacts of Covid 19 on the Economy of your country. 


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