Yes we are expecting both, the recession and job losses. An economy is considered to be in recession if it witnesses two consecutive quarters of decline in its growth.
But the National Bureau of Economic Research (NBER) defines a recession as a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.
Only time will tell if there will be a “huge” recession or not also the exact amount of time for which it will sustain.
The world is currently fighting with the COVID-19 emergency where no country has been spared from its danger. Amidst all this, local and small businesses all over are on the verge of getting closed rather most have been, considering the very sensitive present scenario.
As far the United States is concerned, economist Michelle Meyer has clearly said in her note that, “We are officially declaring that the economy has fallen into a recession, joining the rest of the world, and it is a deep plunge.”
Mr. Anand Mahindra has also supported the fact that the world now cannot escape a recession and the most effected will be the small businesses, self-employed and the daily wage workers. He also has stated a solution of a post fight ‘Marshall Plan’ (just like the US did after the WWII, to support the populations which were hit the hardest) and to eventually form a sustained growth cycle.
The Indian economy in these situations can get some help from its agrarian nature of economy. But the rest of the industries are going to suffer tremendous loses especially those which are related to the services sector.
India was already in its slowdown phase which had some hope of its revival after the current budget session and due to the economic cycle, but now the scenario has completely changed. Rumki Majumdar, an economist with Deloitte India has stated that, “India’s exposure to the global economy is low because of the country’s limited presence in the global supply chain.” Which gives sense of relief but the domestic industries are going to get hurt and could mean a long term loss.
India’s banking sector is already facing the blow because of its lending policies, fluctuations in Non-Performing Assets, liquidity, Repo rates, etc and the current situation shall make it worse if its exposed to the industries which have a high dependency on China.
Now coming onto layoffs and job losses, then it has already began. The most prominently affected will be the Aviation, Hospitality and Travel and Tourism sectors. Other related industries will also face a stiff situation and eventually require the need to layoff a large of chunk of the workforce to cut costs when the fight will be finally over. No new projects will mean that the Indian IT industry will also face the heat since most of the firm’s are service based. According to the recent estimates, unemployment could rise anywhere between 6–25 million all over the world.
More than the scare of a falling world economy, there is a much bigger fear to fight the Coronavirus, especially in the high population density countries like India. But our medical workforce is ensuring that the spread of the virus stays in the second stage itself and are constantly working to make things right. We all as citizens now have a common responsibility to follow the govt orders and take precautions as mentioned by WHO and help other around us understand the situation as well by avoiding any unnecessary panic.