A peep into how global economy and businesses are impacted by COVID-19 pandemic

Global economy could shrink by 1%.

The global economy could shrink by up to 1 per cent in 2020 due to the COVID-19 pandemic, and may contract even further if restrictions on economic activities are extended without adequate fiscal responses, according to analysis released on Wednesday by the UN Department of Economic and Social Affairs (UN-DESA).

The UN-DESA briefing finds that millions of workers are at risk of losing their jobs as nearly 100 countries close their national borders. That could translate to a global economic contraction of 0.9 per cent by the end of 2020, or even higher if governments fail to provide income support and help boost consumer spending, Xinhua reported citing the UN-DESA study.

According to the forecast, lockdowns in Europe and North America are hitting the service sector hard, particularly industries that involve physical interactions such as retail trade, leisure and hospitality, recreation and transportation services. Collectively, such industries account for more than a quarter of all jobs in these economies.

As businesses lose revenue, unemployment is likely to increase sharply, transforming a supply-side shock to a wider demand-side shock for the economy. The severity of the impact will largely depend on the duration of restrictions on the movement of people and economic activities and on the scale and efficacy of responses by national treasuries.

Many Indian traders to shut shop in absence of stimulus.

The Confederation of All India Traders (CAIT) said that a significant portion of traders in the country will be forced to go out of business due to the ongoing lockdown if the government does not come up with a stimulus package.

The traders’ body said that more than 6.5 crore traders have completely downed their shutters in view of the national lockdown and have absolutely no means of revenue and will remain without income for a longer period.

Airlines may post $39B net loss in April-June Q.

The aviation industry that is going through a tough phase amid the coronavirus crisis, is likely to register a net loss of $39 billion during April-June 2020, according to a report by the International Air Transport Association (IATA).

The report further said that revenue of the airlines may fall by 68 per cent during the quarter. The fall in demand would be the deepest in the second quarter, with a 71 per cent drop.

Variable costs are expected to drop sharply by some 70 per cent in the second quarter, largely in line with the reduction of an expected 65 per cent cut in second quarter capacity, said the IATA report. The price of jet fuel has also fallen sharply, although we estimate that fuel hedging will limit the benefit to a 31 per cent decline.