As COVID-19 spreads
exponentially across the world, and the figures of those testing positive
as also the numbers of deaths keep increasing in near-geometrical
progression, profound uncertainty and extreme volatility are wreaking
havoc of a kind seldom encountered previously.
It might, hence, be wise to
start thinking of what next, if at least to try and handle a situation
created by the most serious pandemic in recent centuries.
Significant role that China plays
The problem with the novel
coronavirus is that with the exception of China, which battled another
coronavirus epidemic in 2003 (the Severe Acute Respiratory Syndrome (SARS)
epidemic) there is little available for most nations on which to base
their assessment of what next.
What is known is that China’s
growth rate has further plummeted, even as it was confronting an economic
slowdown which had been in the works for some time.
The consequences for the
global economy of China ceasing to be the world’s biggest exporter of
manufactured goods are considerable, and with no country in a position to
replace it, this development will precipitate a further economic downturn
Countries are affected?
If China was the worst
affected nation initially, the United States, Spain, Germany and Italy
have since eclipsed China.
Many other countries are
today facing a serious plight, and few, if any, remedies are as yet
available even as the human costs keep mounting. Still, it is important to
think of what lies ahead.
The COVID-19 pandemic could
not have come at a more difficult time.
The world was already having
to contend with an uncertain economic environment, with industries in turn
facing newer challenges such as having to adjust to a shift from cost
efficiencies to innovation and breakthrough improvements.
Added to this were: a global
slowdown, increasing political and policy uncertainties, alterations in
social behaviour, new environmental norms, etc.
Newly emerging economies,
such as India, were even more affected by all this, than some of the older
India being affected?
At one point, India was
estimated to be among the 15 most affected economies by the COVID-19
A recent industry estimate
pegs the cost of the lockdown at around $120 billion or 4% of India’s GDP.
The Confederation of Indian
Industry (CII) had at one point warned that the COVID-19 impact, and the
existing stress in the financial sector, meant that India would require up
to six months even after the entire course of the COVID-19 epidemic is
over to restore normalcy and business continuity.
India has, no doubt, acted
with speed in the wake of the pandemic and declared a lockdown early on.
Global Economic Decline
Uncertainty, panic and
lockdown policies are expected to cause demand worldwide to decline in a
This will inevitably lead to
a vicious downward cycle, where companies close down, resulting in more
lay-offs and a further drop in consumption. A precipitous decline in GDP
To compensate for this loss,
massive inflows of government funds would be needed, but most governments,
India included, might find it difficult to find adequate resources for
Equally important, if not
more so, is that such massive inflows of funds (if they are to be
effective) should be here and now, and not later, by which time the
situation may well have spiralled out of control.
Global coordination was a
must in the extant situation.
faced by the Major players in the Economic field
U.S. command of the global
commons has weakened. Meantime, China and Russia have strengthened their
relationship, and improved their asymmetric capabilities.
The challenge from China is
becoming more obvious by the day — measured by purchasing power parity,
the U.S. is not the largest economy in the world as of now.
Even more daunting from a
U.S. standpoint, and also representing a sea-change from the recent past,
Russia has become far more economically and politically stable and an
important power broker in West Asia.
These shifts cannot but, and
are likely to, have a direct impact on the liberal international order.
It could, in turn, give a
boost to authoritarian regimes and authoritarian trends.
Moving away from the
political and economic consequences of COVID-19 are other concerns arising
from an extended lockdown, social distancing and isolation.
Psychologists are even
talking of an ‘epidemic of despair’ arising from a fear of unknown causes,
resulting in serious anxiety and mental problems.
Extended isolation, according
to psychologists, can trigger a different kind of pandemic even leading to
possible suicidal tendencies, fits of anger, depression, alcoholism and
eccentric behavioural patterns.
One possible, and unexpected,
aspect of the COVID-19 epidemic could be the thrust it could provide to
China’s authoritarian methods
seem to have helped it to contain the spread of the virus — at least for
the time being.
Somewhat similar tactics are
being employed by some other countries as well. In turn, leaders across
many nations may find China’s methods, and the embracing of technology to
refashion authoritarianism for the modern age irresistible, and a standard
to be adapted, even if they profess to be democratic.
The rise of digital
autocracies could lead to digital repression, and in the age of AI-powered
surveillance, create a capacity for predictive control, or what is often
referred to as ‘social management’.