The Covid-19 pandemic, leading to the ‘Great Lockdown’ has affected more than two million people, killing more than a lakh people, across 200 countries. Whenever countries gradually win the war against this faceless enemy, the havoc it has wreaked will be felt for years to come, both socially and economically. Many experts believe that the economic fallout in the years to come will be much bigger than the human toll.
It is imminent that the world is facing the biggest economic crisis after the Great Depression of 1930. The IMF predicts the per capita incomes of 170 countries to decline due to the coronavirus. Barely months ago, the global agency was forecasting the per capita incomes to actually grow in 160 of those nations this year.
The spread of the coronavirus has somewhat tarnished the image of developed countries and their slow response to fight the pandemic, especially in European countries and the US, as compared to China, South Korea, Singapore, and India. This is despite the fact the European nations boast of good governance and exemplary healthcare infrastructure.
The slow and chaotic response to the pandemic by US leadership has exposed hundreds of thousands of Americans to the deadly virus and dampened its image as a global crisis leader, giving an opening to China whose response has been swifter and has been able to control the pandemic with greater alacrity.
Does it mean that the pandemic would trigger a shift in the balance of power from the West to East?
Not just stamping the coronavirus at home, the Chinese government is offering assistance to Italy and other badly affected countries, thus re-enforcing its credentials as a global leader. Given the prowess of China’s manufacturing strength as a global factory as well as its own huge domestic market, it is possible China will recover faster than the US.
It would be a different story in poorer countries with limited resources and means of recovery and could lead to widespread volatility and maybe also social unrest.
On the other hand, the Covid-19 outbreak might help strengthen the state and rekindle nationalism. It could lead to a world that is less open, less prosperous, and less free.
The impact of the Covid-19 will be varied for various countries and some will be hit harder than others.
The world’s major economies including the US, Europe, Russia, China, and India will come out bruised and battered and the balance of power will take a while to settle into the new normal as with our ‘new normal lock-down’ lifestyles.