Impact of India's Recession due to COVID-19 Over the Rest of the World.

After the great depression of 1929 and recession 2008, once again the world economy is lagging behind this year with a predicted loss of trillions of dollars of global income due to the coronavirus pandemic.

Recession

During the recession of 2008, the economic growth rate was above 8% for 3 years since 2006, it fell to 5.5%. The trade impact of the coronavirus epidemic for India is estimated to be about 348 million dollars and the country figures among the top 15 economies most affected as slowdown of manufacturing in China disrupts world trade.

Data

The provisional data for India’s exports during March 2020 accounted for a little over $21.4 billion, despite a promising performance in just the previous month. This fall of approximately 35% year-on-year, as compared to March 2019 ($32.72 billion), is touching a multi-year low. Low domestic demand and rising restrictions have also meant that imports by India have been comparatively decreasing from before. According to government data, India’s trade deficit with China has halved to $1.2 billion in June, from $2.4 billion in May.

Aftermath

As an immediate aftermath of the spread of the COVID-19 pandemic to multiple countries, global demand has fallen significantly and many orders from India have been cancelled. India’s exports to China surged by more than 78% in June, while those to Malaysia rose by 76%, Vietnam by 43% and Singapore by 37%.

Impact on the USA

The effects of change in demand in India’s largest export market that is USA , account for more than $50 billion worth of exports annually. Analysing recent import data of the USA between January and April 2020, the composition of shipments has drastically changed in January 2020, to March 2020 when it hit its peak in the USA, the inflow of non-essential and luxury goods has fallen by around 18% and 35% respectively out of the overall exports from India to the USA, worth over $50 billion, around 21% of goods fall in the essential goods.

So basically, India is an important trading partner with many countries across the world, the gap between country’s and exports has been affected a lot in recent months, if we are able to come up with the vaccine, then hopefully the trade will be back to normal, but if not,

Many countries will face more severe conditions due to the same.

By : Arpita Khanduja