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VIRAL ECONOMIES

Why in news?

The global economy appears headed for uncharted, troubled territory because of the second wave of the coronavirus that has now spread to countries as far apart as Nigeria and New Zealand

Financial impact of COVID

  • The virus has crippled global supply chains, hit air travel and convulsed markets as it appears all set to adversely impact the U.S. economy, the global economic engine.
  • This happened  when the Chinese economy is already in deep trouble due to the impact of the virus.
  • A slowdown or worse, recession, in the two global economic engines is bad news for the world economy, which may well tilt into recession. 

Situation in US

  • The U.S. markets experienced their worst week since the 2008 global financial crisis as the Dow Jones Industrial Average and the S&P 500 fell by over 12%.
  • There is trouble ahead for the U.S. economy as companies ranging from Apple and Nvidia to Procter & Gamble and Adidas are in difficulty because of their large exposures to the Chinese market or their reliance on suppliers from China. This is a crisis unlike any other.

Situation in India

  • Indian companies are not major participants in the global supply chains originating in China and thus are facing  minimum impact.
  • Crude oil prices are slipping which is good news for the macro economy and inflation in India.
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June 2022
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