InternationalJournalofBusinessandGeneral Management(IJBGM)
ISSN(P):2319–2267;ISSN(E):2319–2275
Vol.11,Issue2,Jul–Dec2022;25–32 ©IASET
COMPARATIVESTUDYOFINDIAANDWORLDECONOMYDURINGCOVID19
Dr.AkanshaJain ResearcherandSeniorLecturer,JaipurSchool,VidhyadharNagar,Jaipur,Rajasthan,India
ABSTRACT
InthispaperresearchhasbeenmadetostudytheimpactofCovid19onworldeconomyandIndia.GDPgrowthrateof countrieshaslargelyaffected.Globaleconomicprospects2020,emphasisontheimmediateandnear-neartermoutlook fortheimpactoftheCovid19andgrowthoftheeconomiesworldwide.Accordingtothereportthattherewillbethe declineof5.2%inglobalGDPin2020.Theworldeconomyisgoingtofacethedeepestglobalrecessionwhichwill directlyaffecttheIndianEconomy.WeallknowthatIndianeconomyisinterlinkingwithworldforforeigntrade. ThereforeslowdownwillalsoaffectvarioussectorofIndianeconomy.Beingadevelopingcountry,notonlyexternal,but alsointernalchallengesaregrowingandcreatinghurdleinthegrowthofthenation.
ThereforethispaperhighlightsthechallengesandimpactofCovid19inIndiaaswellasworldeconomy.
KEYWORDS:CORONA,GDPGrowthRate,UnemploymentRate,RegressionAnalysis,Correlation,WorldEconomy
ArticleHistory
Received:23Aug2022|Revised:02Sep2022|Accepted:07Sep2022
1.INTRODUCTION
DuetothisPandemictheworldeconomyhaschanged.ItstartedfromChinaandhadspreadtonearly200countries Worldwide.Sincethereisnovaccineavailabletocounterthespreadofvirus,manycountriesareworkingoverittoinvent thevaccinetosavethisworld,intillthentheonlysolutionavailabletoholditsspreadisfollowingprecautionslikesocial distancing,wearingmaskanduseofsanitizersetc.Thesocialdistancinghasresultedintocompletegloballockdownand thuscompleteshutdownofeconomicactivitiesexceptindispensablerequirements.Thispandemichasnotonlyaffected humanlifebutalsovariousissueslikesocial,political,environmental,religiousetcperspectives.
Afterimplicationofglobalization,oureconomyisdependentoninternationaltradeandourforeignpolicy.With thiscurrentsituationwecandistinguishtheglobaleconomybetweenpre-Covidandpost-Covidperiod.Andthedetestation againstchinamayresultinserioustradeissuesandcanturnintoglobalfinancialcrises.
SomeNegativeImpactsofLockdownonEconomy
Estimateenvisionsa5.2percentcontractioninglobalGDPin2020,usingmarketexchangerateweightsthedeepest globalrecessionindecades,despitetheextraordinaryeffortsofgovernmentstocounterthedeclinewithfiscaland monetarypolicysupport.Manyotherissueslike:
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Completedisturbanceofglobalsupplychains.
Lowerdemandfromconsumptionside.
Unemploymentnearly26millionpeoplelostjobsin
Globalgrowthin2020tofallto-3%(WorldeconomicoutlookAprilreport).IMFprojectedIndia'sgrowthtofall to1.2%in2020.
CumulativelosstoglobalGDPover2020&2021willbearound9trilliondollars.
MSMEsectorisfacingproblemwhichprovidesemploymentinIndia.
Ituncleartherepaymentofloans.
Theexpenditureonhealthcaremayresultinchangesofbudgetestimates.
Secondaryandtertiaryeconomicactivitiesarerelativelymoreimpacted.
Aviationsectorisalsobadlyaffected.
OBJECTIVEOFTHESTUDY
Followingattemptshavebeenmadeto:
TounderstandthepreCovidandpostCovidsituations.
ToanalyzetheimpactofcoronaonGDPoftheworldandalsoemployments.
TomeasurethecorrelationbetweenCovidcasesandGDPandunemploymentrateofthecountries.
Hypotheses:nullhypotheses:thereishighpositivecorrelationbetweencoronacasesandGDP.
RESEARCHMETHODOLOGY
Tostudythispapersecondarymethodhasbeenused.Differentsiteslikewww.economictimes.com,www.indiatoday.com, www.moneycontrol.com,www.IMF.comandreportsofIMF,WHO,GOIetc.,newspaperreportandmanymore.Totest thehypothesesregressionmodelisusedthroughSPSSsoftware.Diagrams,chartsandtablesareformedusingExcel spreadsheets.
2.WORLDECONOMY:PREANDPOSTPANDEMIC
Inthissegment,thehighlightsaregiveninrelationtotheGDPgrowthratebeforethispandemicandexpectedgrowthrate afterthispandemic.
Herethecomparisonhasbeenmadeusingdataofdifferentcountriesintheworld.Here,youcanseethatworld GDPgrowthratestoodat3.6%in2018and3.0%in2019whiletheexpectedrateofgrowthinGDPin2020isonly0.1% andby2021itwillbeonly0.2%.thisindicateshowpostcovid-19goingtoaffectworldeconomyifwearegoingto comparethelargesteconomyoftheworldlikeUSA,EuropeanUnion,Britain,thesituationcanbeseenherethattheseall countrieswerehavinggoodGDPgrowthratein2018and19theirgrowthhasbeendeclinedandifwetalkabout2020, theyareshowingthenegativegrowthrateintermsofGDPwhiletheretheyallareexpectedtogrowatabout4to6%by 2021.IfwetalkedaboutIndiaincomparisonofothercountryweareatabetterplacebecauseourGDPgrowthratein
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26 Dr.AkanshaJain
2018was6.8%andin2019at6.1andwearenotstillhavinganynegativeimpactofitwearehaving1.9expectedGDP growthratein2020andby2021,weareassumingthatwewillbeat7.4%ofGDP.ComparingChinawewillbebetterbut restChinawillgrowatfasterrate.Sothisishowwecancompareheretheworldeconomyandthelargesteconomyofthe worldwithIndianeconomyandtheirtargetedGDPgrowthby2021andwecanfindherethatIndiaisabetterposition comparedtohighlydevelopedcountries.
RegressionAnalysis
FollowingresultofcorrelationanddependencybetweenCoronacasesandGDPgrowthhasbeendrawnusingdataofMay andJune2020.ForthisregressionandcorrelationtoolsareusedusingSPSSsoftware.Equationisformed:
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PreCOVID19 PostCOVID19 WorldandCountries 2018 2019 2020 2021 World 3.6 3.01 0.1 0.2 USA 2.9 2.4 -5.9 4.7 EuropeanUnion 2.2 1.5 -7.4 6.1 Britain 1.4 1.2 -8.3 6 Germany 1.5 0.5 -6.5 5.9 Japan 0.8 0.9 -5.9 3.0 Russia 23 1.1 -6.0 1.0 India 68 6.1 1.9 7.4 China 6.6 6.1 1.2 9.2
Table1.GDPGrowthRateofDifferentCountriesPreandPostCOVID19(in%)
Source:IMFandeconomicoutlookApril2020Estimate.
Figure1:GDPGrowthRateofDifferentCountriesPreandPostCOVID19(TillApril2020). Note:ThisdatahasbeenanalyzedusingtheprojectioninmonthofApril,2020.
+ b0isinterceptandb1isregressioncoefficient Table2:RegressionAnalysis:Result Model UnstandardizedCoefficients Standardized Coefficients t Sig. B Std.Error Beta 1 (Constant) -9.833 1.305 -7.537 .000 corona 1.852E-007 .000 .168 .481 .643 a.DependentVariable:GDP b.Predictors:(Constant),corona
WorldandCountries 2019 0.2 2.4 -8.3 0.8 IMFandeconomicoutlookApril2020Estimate.
Table1.GDPGrowthRateofDifferentCountriesPreandPostCOVID19(in%)
RegressionAnalysis + Table2:RegressionAnalysis:Result Sig. (Constant) .000 corona .168 .643 1
Figure1:GDPGrowthRateofDifferentCountriesPreandPostCOVID19(TillApril2020). Note:ThisdatahasbeenanalyzedusingtheprojectioninmonthofApril,2020.
Hereconstantvalueisusedtoformequation.Itimpliesthatifcoronacasesincreasesby1unit,GDPdecreasesby 1.85units.Itshowsthatcoronaspreadisgivingnegativeimpactoneconomiesoftheworld.Thiscanalsobeanalyzedwith Tvalueofthisresult.Thechosenregressionmodelforperiodhaveagoodfit.Thusthesignificanceofthemodelsare testedbyusingTvalueintable.Itismeasuredat5%significantlevelforthisTvalueiscomparedwiththevalueof5% confidencelevelifitisgreaterthan2.086thanrelationissignificantandifitislessthan2.086thanitisinsignificant.Here coefficientvaluesofdependentandindependentvariablesareindicatedbybetavaluesintable.Andwefindthattvalueis 481whichmeans,dependentandindependentvariableareinsignificantlyrelatedbecauseTvalueislessthan2.086and constantTvalueisfoundnegative.WhichmeansincreaseincoronacasesmayshownegativeeffectonGDPofcountries.
ThecorrelationshowshereusingBetavalue,whichisfound.168.Itindicatesthatthereislowpositivecorrelation betweencoronacasesandgrowthofGDP.Thushereanullhypothesishasbeenrejectedandalternativehypothesisis accepted.ItindicatesthatwithincreaseincoronacasescountiesGDPgrowthaffectednegativelybutlessbecausedifferent countrieshavedifferentgrowthandrateofcoronacases.
CoronaCasesinDifferentCountriesandUnemploymentRate
Itshowsthatcoronaspreadisgivingpositiveimpactoneconomiesoftheworldintermsofunemployment.This canalsobeanalyzedwithTvalueofthisresult.Herecoefficientvaluesofdependentandindependentvariablesare indicatedbybetavaluesintable.Andwefindthattvalueis.434whichmeans,dependentandindependentvariableare insignificantlyrelatedbecauseTvalueislessthan2.086.Whichmeansincreaseincoronacasesmaycauseincreasein unemploymentrates.
Correlationfoundhereismoderatepositive,indicatesthateconomiesarefacingunemploymentduetothis pandemic.
Let’sdiscusssomemoreaboutworldeconomydividingintothreecategories
InthegivenFigurebelowitcanbeanalyzedthatin2019theglobaleconomyhas2.9%GDPgrowthrateand advancedcountriesweremaintainedin1.7%ofGDPgrowthwhiledevelopingcountriesaremaintaining3.7%.GDP growthreachingto2020whenwearefacingthiscoronapandemictheglobaleconomicfacednegativeGDPgrowththatis 4.9%eventheadvanceeconomicsface8.0%whiledevelopingcountryface3.0%andtheprojectionfor2021onthe basisofpresentsituationistakenastheincrementinglobaleconomymeansitwillbeat5.4%,advancedeconomieswill
28 Dr.AkanshaJain ImpactFactor(JCC):7.4543 NAASRating3.51
eq(1)
9833+185 007
Model UnstandardizedCoefficients Standardized Coefficients t Sig. B Std.Error Beta 1 (Constant) 7.402 1.480 5.000 .002 corona 1.815E-006 .000 .434 1.274 .243 a.DependentVariable:unemployment Uemp=7402+1815E 006 eq(2)
Table3:ResultofRegressionAnalyses
have4.8anddevelopingeconomieswillbeat5.9%GDPgrowth.overallwecanunderstandthatcomparedtoadvanced economiesdevelopmenteconomiesarenotfacingthatmuchseriousproblemliketheirGDPgrowthhasdeclinedlower thantheadvanceeconomyGDPgrowthratein2020andwhenwearetalkingaboutrecoveryandprojectionfor2021,there alsodevelopingcountryeconomyGDPisgrowingfasterthantheadvancedeconomiesintheworldandoverallglobal economywillboostupandrecoversoon.Sowecanhopethatinnearfutureby2021oureconomywillberecoveredas wellastheworldeconomywillberecoveredandwewillgetbacktoworkplaces,wewillgetbacktoOuremployment,we willgetbacktoourGDPgrowthrateandoverallwewillhavegoodscenariointhefuture.Solet'shopeforthepositive andhavegoodeconomyinfuture.
IndianScenario
NowinthissegmentIndianscenariowillbediscussedonthebasisofwhich,therealpictureofIndianeconomyduring lockdownorduetocoronawillbediscussed.talkingaboutIndianscenariowecanseethatIndianGDPgrowthonthebasis ofquarterlyrecordwasalsoverydifferent.FromOctobertoDecember2019theGDPgrowthratewasjustonepoint20% asweallknowthatIndiaisnowadayhavingvariousnewpoliciesimplementationduetowhichithasaffectedourGDP growthwiththenewyearfromJanuarytoMarch2020,wecanseethatGDPgrowthratehasincreasedto5%butwhenthe pandemicknockedourgate,whenthispandemicenterintoahousefromApriltoJune2020.ThisstatesthatIndia'sGDP growthhasdeclinedandshowsnegativeaffectitmeansweareabletodosomethingbetterbutduetoCovid19ourgrowth ratehasdeclineddrasticallywhichaffectedourmajorsectorsofeconomy,manufacturing,laboursector,servicesectorand manymore.weweretargetingfor5%GDPratebutexperiencednegativegrowthwhichisnotagoodsignofoureconomy becauseweareinthecategoryofdevelopingeconomywherewehavetogowithvarioussteps,varioussolutionsand varioussetbackalso.Withthepresentscenario,itcanbesaidthatthispandemichasmadeus10yearsbackeconomyfor whichweneedastrongsupportoffinancialmonetaryandfiscalpolicieswhichcanboostoureconomyandcanboostour participationinworldeconomyaswell
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Figure2:ClassificationofCountriesandGDPGrowthRate(in%).
3.CONCLUSION
OnthebasisofaboveresearchitcanbeconcludedthatnotonlyIndiabuttheworldisfacingtheseriousproblemof economicslowdownaswellastheissueofworkforceparticipationandunemploymentintheeconomicfactorswhichare goingtoaffectinadrasticfacetotheoverallGDPgrowthofworldeconomyaccordingtotheresearchthewehavefound thatwithincreaseincoronaviruscasestherehasbeenanegativeimpactonGDPgrowthofworldwideaswellasinIndia butwhenwearetalkingaboutthegrowthinnegativetermitcanalsoberealisedthatthenegativegrowthwillnotbe remainforlongtimebecausedifferentcountrieshasdifferentwaytohealuptheirsituationforthisreasonthecoronavirus Azharfounddifferentindifferentcountriesbecauseofwastetheirnegativegrowthisnotsomuchaccordingtothe developedordevelopingcountriesforthemorewhenweresearchusingregressionmodelincoronacasesand unemploymentitisfoundthatthereispositiverelationbetweentheincreasingcoronacasesandtherateofunemployment asheonlythataswellascoronacaseswillincreaseinanycountrytherateofunemploymentwillalsoincreaseandinthe worldcauseweareherecomparingworldwiththedifferentscenarioofcasestheunemploymentratehasdifferentscenario butitisfoundmoderatebecausetheeconomyofdifferentcountrieshavedifferentsolution
UnemploymentwasreallyhighinthemonthofAprilbutwhenwereachestoMayandJunewhenthecountries areplanningandengagethemselvestocontrol20diseaseifithasrealisethatwiththeincreaseincoronacaseson employmenthasnotbeeneffectedatthatlevelbecauseofwhichwecanseethatnowadayspeoplearenotasmuchand employedasitwasinmonthofApril.
WiththeprojectionandestimateofIMFandWorldeconomicOutlookithasbeenalsorealisethatourglobal economyisgoingtorecoversoonespeciallythedevelopingcountrieswillrecoverfasterthanthedevelopedcountriesas weallknowthedevelopingcountriesarealwaysfacingchallengesandtrytomakethemselvessurviveinallkindof situationforthismadethisreasonwecansaythatdevelopingcountrywillgrowmorefasterthanthedevelopedcountryin nearfutureby2021globaleconomywillbecoveratfastestrateandwillbeabletoprovidebetteremploymenttotheworld workforce
TalkingaboutIndianscenariowehavefoundthatrightIndianactorshasbeenlargelyaffectedduetocoronavirus todayinourcountrybutwehavealsorealisethatweareinastateofrecoveryaswellandwearetargetingtoprovidemore andbetteremploymentopportunitytothepeopleandtryingtogrowatfasterrageintheworldeconomyandtorecoverthe situationtoprovidebettercontributioninworldeconomyGDPgrowth.
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