Diagnosing based on current symptoms, we don’t need a degree in economics to predict what’s coming. A global recession is inevitable and this time it is going to be worse than ever before.

The novel coronavirus has killed over 400 people and affected over 12,000 people in India alone. Over 10,000 people have lost their lives in just the last 24 hours with over 20 lakh COVID-19 positive cases, taking overall death toll up to well over 1.3 lakh across the globe.

With half of the world’s population locked down in their own homes and with restrictions on movement, businesses and more or less everything, the pace of the global supply chain has turned sluggish.

Thanks to the Wuhan virus’s butterfly effect, manufacturing had to be brought to a standstill to prevent the spread of the virus in the communist country. The People’s Republic of China, that also happens to control 1/3rd of the world’s supply of both finished and unfinished commodities, stopped manufacturing goods which led to a sharp decline in the supply of goods; further leading to a decline in the sale, sharp fall in revenue generated, ultimately resulting in worldwide lay-offs.

he entire sequence can be seen in action across the globe right now because today we live in a world so connected, anything happening in any part of the world affects us all.

If we look back in time and look at the Great Depression which was the worst economic downturn in history, it sent Wall Street into a panic state wiping out millions of investors.

About 15 million Americans had lost their jobs and half of America’s banks had bailed out. This year International Monetary Fund (IMF) has predicted the worst downturn since the Great depression, issuing a stark warning about the economic toll of the Coronavirus pandemic.

The economic output of nations is collapsing at an unprecedented pace and the international organization also suggests that this crisis could reverse our gains from globalization earned over decades!

Even in 2001, the world saw a rapid drop in stock market prices and the 9/11 attacks had a big role to play in slowing down of economies in various parts of the world with almost a doubled unemployment rate across the globe.

The last time, we witnessed a global financial crisis which began around December of 2007 but the markets began to crash around September of 2008 and it wasn’t until March of 2009 that world economy hit rock bottom. The 2008- 09 period of the financial crisis was a result of a massive flaw in handling finances on a global scale but this time, it is different and unlike anything we’ve ever seen before. It is extreme and the world is in a state of panic. During this 2008 financial crisis, people lost jobs, companies bailed out and the economy went crashing down.  Stock markets had dropped by a whopping 56% in a period of a little over 500 days, but this time, the global recession will be worse because the stock markets have seen a sharp 20% decline in just about a period of 3 weeks!

The 2008-09 recession had only contracted world economy by a little less than 1%, and although 1 per cent is a lot, I say ‘only’ because this year, the global economy is all set to contract by 3% at least as per IMF’s projections in its World Economic Outlook. Consumer debt is supposedly higher than ever before and stock market volatility is as bad as it was right before the 2008 recession.

The travel ban has brought airlines at the verge of bankruptcy, the entertainment industry is hit due to the norms of social distancing and impossibility of having any large gathering of people, sports industry, the broadcast industry, every single wage earner working behind the scenes, every business that we can think of is at the verge of bailing out. Businesses are going to shut down because they’ll run out of money to pay bills and salaries to employees; restaurants and eateries will be shut.

Like every recession, some businesses tend to make money when everybody else loses theirs, like McDonald’s that say an increase in revenue as more and more people resorting to cheap fast food to feed their families. The only ones who will probably make some money are those businesses involved with doorstep delivery of goods to consumers and online content creators, Netflix, Amazon and other streaming platforms.

These businesses have witnessed a huge spike in viewership and subscriber count since the beginning of this lockdown especially due to a massive chunk of the population online today. Back in 2008, only about 22% of the world was on the internet while today over 60% of the world’s population is active on the internet and more and more people have access to the internet with each passing day.

What lies on the other side of this lockdown? What’s next for us in a post coronavirus world? Are we prepared to help and prevent small and medium businesses from shutting down? Can we, as consumers, go back to retail stores after getting used to the doorstep delivery service?

Are we going to get over the coronavirus hysteria and go back to crowded places? Are we ready to employ the lakhs of students passing out of universities in the next two months? Are we ready to tackle a possible global food shortage problem? How does a country, placed as one of the fastest emerging economies in the world, plan to deal with this mammoth of a problem?

Rifa Deka

Rifa Deka is based in Guwahati and she can be reached at: rifadeka@gmail.com