COVID-19: Developed Countries to Absorb Economic Shock Sooner than Developing Nations

Posted on Updated on

With a rapid surge in the number of cases and mounting death toll, the coronavirus pandemic is wreaking havoc across the globe. So far, COVID-19 has claimed more than 1,25,000+ lives and has infected over 2 million people in more than 200 countries and territories around the world.

The death toll and the number of people infected by COVID-19 shows that the developed nations are the worst affected compared with the developing countries. The US led the number of casualties from Coronavirus, followed by Italy, Spain, France and the UK. These 5 countries constituted nearly 3/4th of the total number of deaths due to Coronavirus.

The rapid spread of Covid-19 has forced the governments around the world to announce Lockdowns, which has not only impacted the lives of people but also halted the overall global growth. The closure of plants and operations announced by companies from almost all the industries led to a short-term collapse in the global output.

Kristalina Georgieva, Managing Director of the International Monetary Fund (IMF) has recently said that global growth will turn “sharply negative” in 2020, as COVID-19 has disrupted the world’s social and economic order “at lightning speed and on a scale that we have not seen in living memory”.

Though the developing countries have not witnessed major casualties, the economic shock triggered by COVID-19 will have devastating impact on both the formal and informal sectors of the economy.

On the other hand, the developed countries, with their financial might, are better placed to absorb the economic shock compared to the developing economies.

Heckyl’s Analysis of News Sentiment around Economic Indicators has also shown that the Developing Countries are most vulnerable to Economic shock than the Developed Countries.

India, Bangladesh, Indonesia and Philippines have recorded a downtrend in the Economic News Sentiment (200-DMA) after a spike in the number of coronavirus cases in March’2020 and subsequent announcement of Lockdowns.

On the contrary, the US has shown an improvement in its Economic News Sentiment helped by an announcement of Rate Cut and Liquidity Measures by the Fed along with USD 2 Trillion stimulus plan unveiled by the US government to cope up with the impact of the coronavirus crisis.

page-3

In the last couple of months, India has received extremely Negative Media Coverage around the health of the economy amid the coronavirus crisis and the lockdown to tackle pandemic. This has impacted the country’s Economic News Sentiment and triggered a downtrend in recent time.

Slowdown in Manufacturing, Services and Overall Economy; Downward Revisions in GDP Growth Forecasts; Job Losses; Drop in Exports/Forex Reserves and a Shortfall in Revenues were some of the topics that dominated the Negative Media coverage for India.

coronavirus-economy

As the governments across the globe are still fighting tooth and nail to stop the spread of COVID-19, the economic recovery looks elusive atleast for the next 3-6 months. In this scenario, the developed countries, with their financial muscle, are expected to tide over the economic shock triggered by the coronavirus crisis sooner than the developing nations.

To monitor the impact of COVID-19 crisis, we have introduced a special screen for the analysis of the portfolio in our Risk Analytics System.

#1. Lenders can monitor the sectors/ companies affected by the coronavirus crisis closely with the help of Heckyl’s advanced analytical system.

#2. Lenders can also categorize such entities in one basket, named COVID-19, and can treat them separately.

For example: A corporate, who has been very disciplined in its repayment behavior, got impacted because it operates in the hospitality industry. This corporate will fall into this newly created COVID-19 bucket.

To know more about our Risk Analytics System, please contact us at info@heckyl.com.

 

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s