Updated December 22, 2022
Although none of the industries could remain immune to the Corona effect, a couple of the sectors are worst affected sectors of the Economy due to Corona Virus Crisis. There are the economic activities which almost wiped off. Hospitality, Air Services, Tourism, Textile, Automobile, and the likes are the ones that have been affected most ruthlessly. The overall effect of this unprecedented collapse of the economy has cost at least 300 million jobs worldwide as per a report of IMF.
The current economic situation is the most saddened economic downturn after the famous depression almost a century ago. As per the World Economic Outlook report of IMF, the world economy is projected a huge negative growth. World Bank, Asian Development Bank, and almost every big credit rating agencies out there have projected a very very gloomy picture of the economy. It is but obvious that the huge downturn in the economy has been added by the sectors which are under almost shut down and there are only bleak chances of their revival anytime soon. Career101.in has taken a deeper dive into the issue keeping in mind the need for aspirants for various competitive exams and has come up with insightful study material.
Worst Affected Sectors of Economy by Corona Crisis
There are no economic activities that have remained unaffected but the sectors which involved commuting, visiting, sightseeing, celebrating, vacationing, partying have come to almost standstill. Fashion, Luxury, clothing, clubbing, eating out, shopping out, etc are almost in a devastating condition. Here is a broad outline of such industries which have been massively hit:
Airlines and Hotels
Preventive measures taken amid the coronavirus outbreak have led to the devastation of several businesses which closely associated with the tourism industry too. Earlier the restrictions were imposed against East Asian travelers and but later extended to Europe because a statement was released by WHO where they acknowledged that the transmission of the infection may occur between passengers in the same area of the aircraft. With no rays of hope for any vaccine development in the nearer future, all countries were forced to close their borders which resulted in the suspension of all forms of travel.
According to a report of Economic Times, the aviation sector in India may face a loss of Rs 85,000 crores along with 29 Lakh jobs. As the Airline and Hotel industry is facing huge losses, numerous workers are being fired and workers that were not fired were forced into unpaid leave. As equity master states, shares of most hotels, leisure, and airline firms have dropped 70% to date due to the lack of demand. Lack in demand is so big that even falling fuel prices couldn’t provide any relief to these industries and it became one of the worst affected sectors that have crashed after the corona crisis.
Not only the commercial airlines are facing loss but also many companies connected with the industry. Production and deferred orders have been suspended by almost every leading airline manufacturer like Airbus, Boeing, Bombardier, Embraer, etc. and some even laying off employees.
Like every sector, automobile too couldn’t remain untouched of the pandemic effects. The industry has been facing a prolonged recession for more than 20 months which would now be a period of inactivity. The domestic sales of passenger vehicles shrink to around 3 million units in FY 2019-2020, down from 3.4 million units in FY 2018-2019. And according to FT Auto, the Indian auto sector earns a gross income of only Rs 2000 crore per day. As the lockdown has long been increasing losses in the automobile industry.
Reliance on different players for different parts makes the auto industry susceptible to being affected by the virus. Even a missing part of Tier-1 or Tier-2 is enough to stop the entire car manufacturer or entire industries. The Indian auto industry relies on China for 27% of the imports. As the regions are dealing with the virus at different time periods, 2020 has been a further worst year for the automobile industry. For India, it is quite unfortunate that Maharashtra aka the Indian Automobile industry has over 8600 cases.
In spite of all these troubles created by the pandemic to the automobile sector, the market boomed rapidly. Because, If we take a look at registrations of the new car the first half of February saw a drop of 92% which was followed by a 47% drop in March. However, this can be the psychological impact of the virus as people after the lockdown would prefer to avoid public transport, taxi, and other ride-hailing services.
Real Estate as one of The Worst Affected Sectors
With the commencement of lockdown all over the country real state sector is one of the worst affected sectors. Let’s look into it from two different points:
(1) Halt in construction work: Due to restriction imposed the construction work in hot spot areas was shut immediately resulted in the loss of their work and at some places, they were deprived of even minimum wages. These unfavorable situations made them migrate back home. The places which were not much affected also suffered due to a lack of logistic supports. As an effect, even those projects which were on the verge of completion got stuck for an unknown period of time.
(2) Demand-side: In this pandemic situation demand for the real state whether it is residential or commercial has declined significantly. Very few are willing to invest in such a situation and those who want to move in a residential flat do not want to invest in an ongoing project because of the uncertainty of its completion they want one which is ready to move in. This low demand will be an obstruction for new project launch and there will be no new real estate projects till everything gets back to normality.
Even if the lockdown ends and we get a potential vaccine against the novel coronavirus it will still take months to get everything on track there will be no peak overshoot in this sector. Some of the listed reasons are: Labor will move to their workplaces at a very low pace and some will also refrain from doing so because of the fear of rollback of virus and without laborers the real state sector cannot function. Demand will also not show a hockey stick curve, it will increase slowly and take over a year or so for the revival of the real estate sector.
Textile Industry as one of The Worst Affected Sectors
Over 105 million employments are provided by the textile industry in India and earn around $40 billion in foreign exchange. Similar to the construction industry, the textile is the industry is labor-intensive and preventive measures taken amid the coronavirus outbreak have led to the devastation of this industry. And hence, it is the worst affected sectors over the pandemic.
The city of Tirupur which is considered as the best avatar of the textile industry has seen to be worst affected. This textile industry serves as a major textile and knitwear hub contributing to 90% of total cotton knitwear exports from India. There are over 10,000 factories that generate assets worth Rs 25,000 crore through exports and the same domestically. Its a loss of three months due to the pandemic is estimated to Rs 12000 crore. This city’s textile industry employs 25 percent of total pollution. The population of the city is approximately 129 lakhs of which 25% will lose their jobs since it is a labor-intensive industry. You know that china is the greatest trading partner of India. So, most of the textile industry in India depends on China for both imports and exports. India exports 20 – 25 million kg a month to China and due to the decrease in demand from China, these exports have been affected. Synthetic yarns worth $460 million and synthetic fibers worth$ 360 million are imported by China. All these import and export activities have affected amid the pandemic. For the revival of textile industries, it will require government-focused relief efforts.
Apart from these India also depends on China for buttons, hangers, zippers, and needles which make up $140 million. Lack of demand from China is not the only challenge that the textile industry is facing but also from Europe the import and export activities are completely restricted. This is because of the countries affected by the pandemic like Italy and Spain have asked not to export to them.
The textile industries are so affected that its revival would only be possible with directed relief measures from the Indian government. This followed by a hopeful end to the pandemic in the next quarter. This will allow India to procure Apparel industries looking for an alternative to the Chinese textile industry.
Oil and Gas Industry
Since Mid-February, the oil prices have been facing a decline in its value because more than two-thirds of the world’s population is in lockdown amid the coronavirus outbreak. And people in lockdown, meaning no one is driving, flying, or doing much that would require the use of crude or its derivatives. Hence, it is one of the worst affected sectors amid the coronavirus outbreak.
However, cheaper crude oil will help reduce the current account deficit. It will also provide many other benefits for the government. A drop in the fuel subsidy provided can also be expected. In addition, the government can also increase duties to boost revenue. Revenue cuts can be used to revitalize other areas.
The ramifications for the oil market are huge, with refiners, producers, and even petrostates all facing uncertain futures. The most immediate set of data from America starkly illustrated the impact. On Wednesday, the US Energy Information Administration reported US drivers consumed the least gasoline for at least 30 years, as normal life ground to a halt.
The Exact Picture of GDP & Economy and Way forward:
To put forth the data by every big Economic Organization could be a daunting task but if we talk about the prestigious World Economic Outlook report of IMF, issued in June 2020 it pegs down the word Economy growth at -4.9% for the year 2020. It is very disheartening to know is that this projection is 1.9% below the April projection of World Economic Outlook. In the month of April 2020, the global GDP projection by IMF for the year 2020 was 3.9%. This is happening because of the uncertain growth of the virus and prolonged shutdown measures taken by governments.
Under the situation when the Corona spread is still intensifying the 75% of the economies are opening. But this opening up of economic activities does seem to lead anywhere. Instances of spikes at the opening of sectors are making govt to abrupt second lock-down and then third lock-down and so forth. World Economy has never been impacted this badly at any point of time in the modern history of civilization. This data mapper by IMF published in April 2020 can give you a broad picture instantly (although this data has been replaced by updated statistics) on the affair of the world economy.
The number of coronavirus cases in India is continuously rising and has reached the mark of 850000. 29 cases are Italian tourists and the rest are Indian. About $348 million trade impact is estimated for India due to coronavirus pandemic. As a UN report says, India is among the top 15 economies most affected by the manufacturing slowdown in China. Almost every brick and mortar along with some online businesses have been affected amid coronavirus outbreak.
The idea is not to paint a bleak future but to look for alternatives in life and career. While the industries are taking a disappointing nosedive, there are others out there that are unfolding as promising ones.
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