Coronavirus cases in India cross 60; UNCTAD warns of global recession

The United Nations Conference on Trade and Development said the virus outbreak can cost global economy up to $2 trillion this year

The coronavirus outbreak could cost the global economy up to $2 trillion this year, the UN's trade and development agency said, warning that shock from the epidemic will cause a recession in some countries and depress global annual growth to below 2.5 per cent.

The United Nations Conference on Trade and Development (UNCTAD) last week had apprehended a $348-million trade impact on India because of the epidemic and that the country figured among the top 15 economies most affected as the manufacturing slowdown in China disrupted world trade.

India on Tuesday witnessed fresh cases of coronavirus emerging in Kerala (six), Karnataka (three) and Maharashtra (three). With these new cases, the number of infected people in the country was now over 50. 

Holi celebrations, too, remained mostly subdued across the country as people avoided joining large groups and venturing out beyond their colonies. Several top politicians, including Prime Minister Narendra Modi, skipped Holi gatherings.

"Only last year people took to streets and celebrated Holi with no holds barred, but there was no replication of last year's scene anywhere in our neighbourhood due to coronavirus scare," said Prakhar Medatwal, a resident of Natanion ka Rasta in the old city area of Jaipur.

The epidemic’s shadow on Holi celebrations in Chennai

Not only India, but several other countries continued to witness a rapidly increasing number of coronavirus cases and deaths. In the battle against the epidemic, many European airways suspended flights to Italy, the second-most affected nation after China.

As the cost of coronavirus epidemic for the world economy mounted, Richard Kozul-Wright, director, Division on Globalization and Development Strategies, UNCTAD, said: “We envisage a slowdown in the global economy to under 2 per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September.” 

The UN agency said that apart from the tragic human consequences of the COVID-19 (coronavirus) epidemic, the economic uncertainty it has sparked will likely cost the global economy $1 trillion in 2020.

A preliminary downside scenario sees a $2-trillion shortfall in global income with a $220-billion hit to developing countries (excluding China). The most badly affected economies in this scenario will be oil-exporting countries, but also other commodity exporters, which stand to lose more than one percentage point of growth, as well as those with strong trade linkages to the initially shocked economies.

Chinese President Xi Jinping visits Wuhan, the outbreak’s epicentre

Growth decelerations between 0.7 per cent and 0.9 per cent are likely to occur in countries, such as Canada, Mexico and the Central American region, in the Americas; countries deeply inserted in the global value chains of East and South Asia, and countries in the immediacy of the European Union.

Launching the UNCTAD report as world financial markets tumbled over concerns about supply-chain interruptions from China, and oil price uncertainty among major producers, Kozul-Wright warned that a few countries were likely to be left unscathed by the outbreak's financial ramifications.

One "Doomsday scenario" in which the world economy grew at only 0.5 per cent, would involve "a $2-trillion hit" to gross domestic product, he said, adding that collapsing oil prices had been "a contributing factor to that growing sense of unease and panic." While it was difficult to predict how the international financial markets will react to COVID-19's impacts "what they do suggest is a world that is extremely anxious," he said.

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