These are excruciating and very difficult times for the entire world. The coronavirus pandemic has wreaked havoc in the entire world and affected all facets of life, so much so that the future has become increasingly uncertain.
Apart from the dangers posed to the lives of millions as the death toll rises by thousands every day, its impact on the world economy is bound to be profound. As concerns about the global coronavirus pandemic and its effect on businesses and economy increased, stock markets throughout the world plummeted in the first three months of the year at a rate not seen for decades.
The Dow Jones industrial average was down 23.2 percent for the quarter, recording its worst start to a year in history. It was also the worst quarterly drop since the 25.3 percent dip in last quarter of 1987 when The Nasdaq dropped 14 percent in the period while the S&P declined by a fifth. In London, the FTSE 100 posted its worst quarter since autumn 1987 when it closed at 5672 points, shedding 24.8 percent of its value since the beginning of the year.
In Europe, Italian stock market has also seen steep losses, marking its worst quarter on record with a drop by 27 percent while the pan-European Stoxx 600 plunged by around 23 percent. Added to that, travel and leisure companies also have suffered their worst quarter in history with their shares collapsing by nearly 42 percent. Similarly, in the Asia-Pacific stock markets, indices have suffered steep losses, posting their worst quarter for more than a decade.
Japan's Nikkei was down by 20 percent while India's Sensex slumped by 28 percent. The loss in Australia's S&P/ASX amounted to 24 percent.
For the oil industry, March was an absolutely dreadful month. Considered the world benchmark, Brent Crude recorded a fall by 55 percent, the worst on record since 1988. Similarly, US oil prices dropped a staggering 54 percent in the month, hovering around $20 a barrel. The slump in oil prices was mainly due to a sharp decline in demand and also a swelling supply. Such a huge drop in demand was mainly because of travel restrictions imposed because of the coronavirus, and also the oil price war between Russia and Saudi Arabia, which swamped the market with a glut of supply.
The big question that is now being asked after such a gloomy picture of the economy and businesses around the world is: Is there a road to recovery?
It must be admitted that many European countries and the United States have been either unprepared or slow in combating the pandemic. Lockdowns and physical distancing may have helped in reducing the spread of the virus at a faster rate, but it is widely believed that even if Covid-19 does subside within a few months, the end of the pandemic is of vital importance. The root cause of the crisis has to be found out, or else, the investors' assessments of share values will be undermined until a vaccine is found. Medical experts say, that could take a year or 18 months.
There are two crucial points to consider. Prolonged lockdowns would bring many economies to their knees. If governments could efficiently work out the tracing of infected people and also speed up the testing procedures, there could be a lifting of restrictions in stages enabling people to return to work and economies to kick-start. The other point is inflation. Governments have injected huge sums of money into the economy which could stir up demand and there could be a spending spree.
It is extremely difficult to predict what sort of a recovery could be expected after the Covid-19 peaks. Some are of the opinion that it would create a 'U-shaped' recovery, that is, a slower and steady return to the normal stage of economy. Others say, the recovery would be more of a speedy 'V-shaped' nature. Even if the recovery is 'V-shaped', which one could assume it would, the big question is, would the upward surge of the right hand side of the V reach the level from where it got down? The best estimate would be it would reach a stage before reaching its former position and then level out before it goes up again in time. That would be a satisfactory scenario for many.
The first day of the April-June quarter, unfortunately, has seen the downward spiral in the stock markets but economists are optimistic that this trend cannot last for long and like previous stock market crashes, this one will also see a recovery, even if it is slow and painful.
As Prince Charles, after testing positive with symptoms of coronavirus and being in self-isolation for seven days, said in his first message about this pandemic: "None of us can say when this will end, but end it will. Until it does, let us all try and live with hope and… look forward to better times to come".
The author is a senior journalist, political and economic commentator and sports analyst.