In view of the fast speed of the novel coronavirus (COVID-19) spread across the world, it is extremely important to prepare for both health and economic ramifications of COVID-19. It has been projected by various orgnisations that the global economy is going to experience a recession pretty soon.
The Centre for Policy Dialogue (CPD) also sees that there are possibilities of a global economic downturn through three direct impacts. That is, COVID-19 will have direct impact on production, supply chain and market disruption, and financial impact on firms and financial markets.
CPD shared these analyses through a virtual media briefing on “Health and Economic Risks of Corona Pandemic and Recommendations” on 21 March 2020 in Dhaka.
Download Presentation | Watch the Virtual Media Briefing
Direct impact on production
The slowdown in China will have a severe impact on exports and imports by countries. Industries dependent on China for raw materials, such as fabrics, readymade garments, electronics, medicines etc. may face a serious impact on their production.
Supply chain and market disruption
Most of the manufacturing firms are highly dependent on the imported intermediate inputs from China. Many industries rely on China for their sales and achieving their financial targets. These industries now face the risk of a negative performance.
Financial impact on firms and financial markets
Disruption of inputs and production may put pressure on some firms. Companies with inadequate liquidity will be particularly under stress. Firms may reduce their engagement in the equity and corporate bond markets due to the uncertainties caused by the COVID-19.