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COVID – 19 & the World Economy

The novel Corona Virus is also known as the COVID-19 is the newest member of the Corona Virus family. This virus has been first discovered in Wuhan, China. This COVID-19 now has spared worldwide and impacted around 787,000 and 38,540 casualties have been reported (Till the date). This virus has been reached on every continent of the globe. Europe has now become a new battleground. People are dying daily and WHO has declared coronavirus as Pandemic.
As the world is trying to revive from this virus, the world economy is starting to feel the impact of the coronavirus. The developed economies along with the developing economies all are facing recession. As per experts, the worst is yet to come. Many people are comparing this recession with the recession of 2008. As per the ILO (International Labour Organisation) almost 25 million people are likely to lose their jobs due to the crisis.
So how a virus lead the world economy into crisis and cause an axe on 25 Million people job? In this series of blogs, we are going to talk about this topic. To understand in detail I will make different blogs for the impact of the virus on different sectors.

In this blog, we will talk about the Share Market and COVID-19

There are different sectors which have shown a significant impact and one of the most visible impacts was on the share market. It is been seen that if a country's economy is in trouble then the share market also tumbles and many people have said that the share market is the mirror of a countries economy.
The world economy was already in recession before COVID-19 but the Pandemic has poured oil into the fire. Due to the coronavirus outbreak governments around the world has to impose a lockdown in their respective countries. This led to lower production of goods and services. This has a direct relation to the GDP output of the nations and global trade. Due to the imposed lockdown economic activity and output of the nations has severely impacted. Which has been reflected in the share market?

To understand the impact on the share market I have bifurcate share markets according to nations.

1.      Indian Share Market (BSE) –
                                                Bombay Stock Exchange is located in Mumbai the financial capital of the nation. India was one of the nations which have recorded very few cases and still at the second stage, but it doesn’t mean it has not been impacted by the virus.

 Bombay Stock Exchange

-          Moneycontrol.com

As per shown in the above figure BSE has been fallen from 40,000 points to almost 25,000 points in a month. It is reported that investors have lost INR 33 lakh crore in a month.

2.      US Share Market –
                                 The US economy is the world’s biggest economy and it has also faced issue due to the recession.

-          Tradingeconomics.com
-           
As you can see in the above figure the US stock market has lost 7000 points from the staring of this year. Dow’s has lost 10% points which are most since the 1987 market crash. This data can indicate the magnitude of the current recession. It is estimated that $3.5 trillion was lost in this crisis.


3.      Chinese Stock Market –
                                        The epicentre of this virus in China and it was obvious that the Chinese stock market will have an impact.


-          Tradingeconomics.com

The Chinese stock market has dropped down from almost 3050 points to 2750 points. Result of this fall is that investors have almost loss $700 billion (The amount can be much higher than given).

4.      Spain Stock Market –
                                    Spain has recorded 2nd highest deaths due to COVID-19. This pandemic has also hurt Spain financially. One of the biggest football club in the world Barcelona who has Millions of Euros’ turnover has asked its footballers for cutting their salary
-          Tradingeconomics.com

IBEX – 35 has reported 14% of the drop in a single day. Spain regulators also said in March 2020 that it will ban 69 stocks which include all liquid shares which price fell more than 10%  

5.      Italian Stock market –
                                     Italy has become a new epicentre of this pandemic. Italy has register highest deaths in the world due to the coronavirus. Its economy is also suffering. People are losing jobs and share markets are down.


-          Tradingeconomics.com

It is recorded that FTSE MIB has registered a 17% drop in the share market which is a considerable amount.
The world economy has observed fall in the past few months not only above share markets but also stock markets in Russia have dropped by 36%, Brazil’s Share market is dropped by 36%, the French share market has observed a 30.35% slide, Germany with 29.43%, Argentina has 29.31% slide, the UK also faced 28.12% drop in their share market.
It is clear that COVID-19 has a significant impact on the economy and share market. In some share market, this dip is marked worsen since 1987.

Conclusion –

                       The fall in the share market is outcome due to the Pandemic. It has started from China which has a mammoth share in the world trade and acts as a factory of the world. Many economists have warned that it can get worse if we fail to contain COVID-19, but as there is always a silver lining behind the dark cloud. China is slowly starting its factories. It means the production will start and we can see some positive symptoms on our economy. 
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Comments

  1. Pushparaj8 April 2020 at 13:07

    If china has started it's factory it means that they have succeeded in vaccine, at some point other wise they have not started.
    If vaccine is not prepared then opening factory decision may be get worse as they are 1st position in population in world.
    What about gulf countries, oil prices etc.

    ReplyDelete

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