The impact of Covid-19 / Coronavirus on Global GDP

The Covid-19 pandemic has hit the world at a scale due to which all the G20 countries will likely go into recession. The global economic outlook is looking unwelcoming, with slowdowns in almost every developed economy across the world. However, it can be assumed that there will be a recovery in the second half of the year. Still, downside risks to this baseline scenario are extremely high, as the emergence of second or third waves of the epidemic would sink growth further. In many countries, the government announced shutdown either till May or June, which would see the impact in demand from the customer in the second quarter of the year.

Even as the Indian economy is likely to be battered by the Covid-19 pandemic this year, it is still expected to be better off than all other G20 countries. While India is expected to be the fastest-growing this year at 2.1%, China and Indonesia will grow at 1% in 2020. The US economy would contract to -2.2% in 2020. The most significant contraction in the GDP growth this year among the rest 17 of the G20 countries would be suffered by Italy (-7%), Germany (-6.8%) and Argentina (-6.7%) followed by Brazil (-5.5%), Mexico (-5.4%), France (-5%), Saudi Arabia (-5%), and UK (-5%).

In the wake of an outbreak, the demand from most of the end-use industries is likely to soar, whereas the supply will be extremely weak. Raw materials will likely be in short supply, as free trade will be curtailed for a while. This pandemic had hit most of the industries such as automotive, electrical & electronics, building & construction, and many others; whereas on the other hand industries such as medical/healthcare and hygiene, packaging, paper & printing are still gaining momentum in the market or have less impact as compared to other end-use industries.

Due to the covid-19 impact, companies such as Henkel, H.B. Fuller, and 3M saw a decline in their sales in the first quarter of 2020. As many of the companies are also anticipating to double their production, it can also be observed that the demand for skin attachment adhesives in the mask would increase so as to seal the gaps in-between the mask and the face.

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