Economy’s Immunity against COVID-19

The novel coronavirus, popularly known as COVID-19, has crossed all borders in a very short period of time and has spared no continent except Antarctica. Some countries are affected more severely than others, with China, Iran, and Italy being the worst affected of all and a few more, including Spain, have also joined them. Traditionally, the spread of infectious diseases was seen in abundance among the poor and people living in vulnerable conditions. However, many of the people who tested positive for COVID-19 are largely celebrities, athletes, politicians and white-collar professionals across the globe and those who have a foreign travel history. The economic impact of COVID-19 on the world economy can be examined from the demand side as well as from the supply side. However, considering the statistics concerning the number of positive cases and deaths in different regions across the globe, the additional factors of uncertainty and threat are also added. With various advanced countries using fiscal measures and quantitative easing in order to limit the impact of the predicted recession, we would expect to see unprecedented shifts in aggregate demand and supply parameters, with upward pressure on prices of goods and services in general and of healthcare services in particular.

Lockdowns result in the forced closure of production facilities, resulting in a shrinkage in supply. Hotels and tourism are the worst affected industries, which will have a knock-on effect on allied industries such as processed food, beverages, and transport. In the context of the present COVID-19 pandemic, the problem is compounded for certain commodities like masks, sanitisers, hand soaps, antibiotics, etc, and medical and paramedical services. There is an increase in demand on the one hand, and on the other hand, there is an extreme shortage of supply despite the manufacturing units for these goods and medical service facilities operating at 100% or more of their capacities. Another fallout of lockdowns is that their announcement results in panic, causing the prices of essential food, groceries and other necessities to escalate.