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A fear psychosis looming large over the world

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We live in a massively globalized world so there will be no country that will not have significant economic distress due to a complete stoppage of all economic activity. The Chinese virus has already claimed 258,356 humans in 170 countries. USA, France, Italy and Spain are the worst sufferers. The death toll is mounting globally. The medical fraternity continues to grapple with no answers on how to contain the damage. The world economic order has been permanently altered, in more ways than one. Every country on this planet has been ravaged by the pandemic.
There used to be a popular adage “sell in May and go away” in the stock market suggesting to sell stocks in May and buying them back at a lower price later on based on the belief that stock markets underperform between May and October. But it was not practically happening always. However, May 2020 is different. The Chinese virus has shaken the world and most parts of the globe are under lockdowns. Supply chains are broken as there are hardly any economic activities going on. Auto, hospitality and aviation sectors are feeling maximum heat. Fundamentals are badly hit and will take more time. Even estimating the severity of economic damage is extremely difficult at this stage. According to the apex tourism federation India’s tourism sector is likely to take a `10 lakh crore hit, denting 10% of the country’s gross domestic product (GDP).

We are living in a very scary world. Economic slowdown is certain. Countries in lockdown around the globe will account for over 50% of global GDP. This time the collapse in commercial activities was sudden and abrupt. This will prove far more severe than in previous recessions. However, we know that India is still in good shape. We also hope the economy is expected to recover in 2021 depending on the evolving scenario of the pandemic.

About the author: IE&M Team

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