The present trade deficit between the two current economic superpowers of the world, USA and China, looks far from being healthy. For obvious reasons President Trump did not want to further endanger it even though the trade gap between the two nations rose to a record height of US $295.5 billion in 2011 wide enough to unsettle him. He preferred to keep quiet until such time as Australian Prime Minister Scott Morrison tried to launch a campaign for an international inquiry into the Covid-19 outbreak claiming that China covered up a laboratory leak in Wuhan, or even released the novel coronavirus on purpose. Before that of course Trump administration was claiming that China was intentionally trying to hide a secret information of Wuhan Lab on Novell corona virus.
Intelligence sources were contradicting it from the beginning and they believed it was based on freely available material and was most likely to have come from the US to help Washington and pressurize China. On the other hand, the scientific community says there is no evidence for the claim that the virus originated in a Wuhan lab. Nothing was particularly indicated in the statement issued by a US intelligence agency regarding the origin of Covid-19. Whether the agency could withstand any pressure from Trump administration to issue a politically convenient statement, as was mentioned in a part of the American press, remains to be seen. But considering the effectiveness of anti-Chinese attitude in next US Elections, it can be safely presumed that the blame game against China is about to be started. Intelligence sources opposed this report because they believed it was received from US and intended to help the US to apply pressure on the Chinese.
The debate around it assumed extreme proportions in the US. Because according to US administration, the Chinese had far-fetched motivation and intention and they want to rule the world after the corona virus is over.
But sadly, neither the US and Australian efforts are taking us closer to a solution. Neither China would like to be belittled through an enquiry like Myanmar nor would the US accept the liabilities of 2008 depression as raised by China. Neither China nor the U.S. can risk any further destabilization of their economies. Honestly speaking, blaming China for the virus will not anywhere near absolving the issue. On the contrary, it will give rise to additional problems in future.
Firstly, China in such cases may hit back and the way the Chinese economy is flourishing, the US will have very little to counteract. In addition, Covid-19 crisis will bring to the fore the urgent necessity of strengthening the climate change activities. Both public health crisis and climate crisis have laid bare the limitation of human power. Covid-19 has left an indelible impression on our body politic and made us realize how deep our liabilities towards the society are which can not be paid back through some taxes or donations.
Everybody appears to be helpless and a very small virus has shaken the entire world. The pandemic is not likely to depart soon. We have to adopt ourselves to the life style amid the pandemic and take much better care for resumption of the economy. That is, national crisis will have to be resolved through national unity.
Corona is likely to continue. The government will have to activate itself after recognizing the new life style as a regular life style and work to minimize the risks as much as possible. ADB has forecast that damage from corona virus would be 8.8 trillion US Dollars.
While there is no way to tell exactly what the economic damage will be, economists are of the opinion that it will have severe negative impacts on the global economy. Early estimates predicated that most major economies will lose at least 2.4 percent of the value of their GDP for 2020. However, these predictions were made prior to COVID-19 becoming a global pandemic, and before the implementation of widespread restrictions on social contact to stop the spread of the virus.
The economic damage caused by the COVID-19 pandemic is largely driven by a fall in demand, meaning that there are not consumers to purchase the goods and services available in the global economy. This fall in demand can be clearly seen in heavily affected industries such as travel and tourism. To slow the spread of the virus, countries placed restrictions on travel, meaning that many people cannot purchase flights for holidays or business trips. This reduction in consumer demand caused airlines to lose planned revenue, meaning that they then need to cut their expenses by reducing the number of flights they operate. Without government assistance, eventually airlines will also need to reduce lay off staff to further cut costs. The same dynamic applies to other industries as well. For example, with falling demand for oil and new cars, social events and holidays are no longer possible. As companies start cutting manpower to make up for lost revenue, the worry is that this will create a downward economic spiral. It is this dynamic that has economists contemplating whether the COVID-19 pandemic could lead to a global recession on the scale of the Great Depression.
Despite the clear danger that the global economy is in, there are also reasons to be hopeful that this worst-case scenario can be avoided. Governments have learned from previous experiences that the effects of a demand-driven recession can be countered with government spending. Consequently, many governments are increasing their provision of monetary welfare to citizens, and ensuring businesses have access to the funds needed to keep their staff employed throughout the pandemic. In addition, the specific nature of this crisis means that some sectors may benefit, such as e-commerce, food retail, and the healthcare industry – providing at least some economic growth to offset the damage. Finally, there is the fact that the crisis may have a clear end date when all restrictions on movement can be lifted (for example, when a vaccine is developed). Taken together, this means it is at least possible that the global economy could experience a sharp rebound once the pandemic is over.
(The author is a TV personality)
