Coronavirus: Lockdown, recession, changes in consumer behaviour will shape economic activity

As India tries to gain control over the COVID-19 pandemic, the period of lockdown, global recession, and changes in consumer behaviour are the three factors that will shape the course of economic activities going ahead, says a report.

According to Dun & Bradstreet's latest economy forecast, changes in consumer behaviour will determine the segments that are likely to flourish after the coronavirus pandemic is brought under control.

“As countries are providing fiscal and monetary stimulus, it remains to be seen how much the loss in the economic activity gets recovered, to what extent the income inequality is narrowed, and the degree to which productivity levels are restored. All these factors will help decide which economies will emerge stronger post this crisis,” Dun & Bradstreet India Chief Economist Arun Singh said.

Prime Minister Narendra Modi had announced a nationwide lockdown on March 24 to combat the coronavirus threat. It was later extended till May 3.

According to Dun & Bradstreet, the nationwide lockdown has led to a near halt of all non-essential activities in the industrial sector, and supply chains have been significantly disrupted with daily movement of trucks falling to less than 10 per cent of normal levels.

“The lockdown has led to near halt in manufacturing units and left millions of short-term migrant and casual workers without jobs,” Singh said.

Moreover, depressed global demand has led to a collapse in global commodity markets.

“The collapse in global demand is depleting savings and increasing debt levels of households, corporates, and governments and will most likely create a channel for a new round of debt crisis,” Singh said.

He added that “as debt levels increase and loans turn bad, the banking sector might face challenges and this can cause financial turmoil, further depressing the income and widening the inequality levels across the world, including India”.

According to the Union Health Ministry, the death toll due to the novel coronavirus pandemic rose to 1,147 and the number of cases climbed to 35,043 in the country on Friday.

Meanwhile, the number of cases around the world linked to the disease has crossed 32.57 lakh and the death toll has topped 2.33 lakh.

(Edited by Teja Lele Desai)