Updated: May 27, 2020
In January & February of 2020, most people believed that Corona would only cause a slight economic dip and that we would be able to recover fairly quickly from this problem. Some even thought that this was largely a China problem and might even mean a shift in supply chains with international buyers shifting sourcing to other countries and not much more. Not many people even remotely imagined the scale of a public health emergency that this would emerge to become.
Given the contagious nature of the virus and the extent of fear and apprehension in the public, some real, some driven by social media frenzy, it was natural for governments across the world, to impose restrictions on public movement & interaction automatically leading to businesses getting shut down. With the increasing spread of the virus, it was also obvious to intensify these restrictions with the problem escalating and dragging along for several months, leading now to fears of severe economic & lifestyle impacts. It is beyond doubt now, that many industries will suffer severely, many companies close down, millions will lose their livelihood and many more will die of hunger than from the disease itself.
As long as human interaction remains dangerous, whether in reality or perception, businesses will not return to normal and moreover the earlier normal may not be the normal anymore. Households and companies who can't service their debt or pay their bills will obviously lead to defaults and bankruptcy, possibly even collapse of several banks and surely a hugely stressed financial market. There is a debate across boundaries, whether there will be a V-shaped or a Nike swoosh shaped recovery or a protracted L shaped recession! But in my opinion, the eventual economic outcome of this pandemic, is impossible for any economist to forecast as it totally depends on the trajectory of the disease and it's cure itself! What seems logical today is that instead of a sudden decisive announcement of a return to normalcy, there will be a series of gradual, caliberated steps over a period of time and even that may get further complicated if there is a return of the virus or a million other things that can go wrong!
It is probably too early to conclude how the Corona virus will impact the society and economy in the long term. However compared to earlier economic crises this time there is a difference with governments across the world taking strong fiscal initiatives and policy measures. Also the availability of surplus financing, probably waiting to be deployed after the epidemic subsides and the pent-up demand from consumers could lead to some kind of a recovery, even if it is protracted and painful. Signing off, with the deepest condolences for all those who have lost their lives in this terrible tragedy and praying for strength to those who survived.
Please share your views on how you think this epidemic will affect your specific sector / industry / society or the world at large.