Evolution of Mankind and Medical Science
Humanity as well as medical science greatly evolved since the end of Spanish Flu which dominated the world from February 1918 till end of April 1920 and within this period it impacted upon 500 million men, women and children all across the world. It struck the mankind in almost four different waves and became stronger and stronger with each wave. But it was overcome by mankind and the victory was earned by medical science.
Covid-19 – A Modern Form of Spanish Flu?
Once again we are facing a severe pandemic which has already taken lives of millions and multi-millions all across the world are under treatment. The virus we are dealing today is called Covid-19, which is somewhat similar to the Spanish Flu, but more lethal and dangerous according to Dr. Israel Figa and is proceeding in its second wave.
Pandemic of Economies
In the words of Israel Figa, the present pandemic, has not only impacted upon the lives and health of mankind, instead one of its major impacts have also been felt throughout the global economies because every country was forced to meet the exigencies arising out of Covid-19 and had to issue reliefs packages. According to Israel Figa, the role of an economy is instrumental in transforming the landscape of a country because it creates jobs opportunities, generates economic opportunities, activities and revenue through multiple industries directly or indirectly. But, as the result of the ongoing pandemic, the business operations had badly suffered, which had and continues to take a heavy toll on the global economy, which resulted in negative growth shock and caused unprecedented deep-rooted recession. Worldwide sales dropped significantly which in turn eliminated the purchasing power of general public.
Currently, the macroeconomic impact of Covid-19 can be witnessed throughout the world. The global GDP growth has contracted to an extremely dangerous levels. There is immense decrease private investment sector, as per Israel Figa’s estimate, there is 30-40 % decrease in Foreign Direct Investment Flows since 2020 till to date, and that too at global level plus there is massive loss of employment as well.
Incentives, what they may seem
When faced with these unwarranted circumstances, in order to circumvent the crisis, and for aiding the deteriorating economies, worldwide governments were forced to initiate corrective steps by adopting measures through which they can combat the effects caused by the pandemic. For instance, the governments were compelled to see financial assistance from international financial lenders. Being wary of the situation, international financial landers too promised to ensure their relentless support. For example, The Paris Club (which is an informal group of official creditors) came to recognize that several countries, which owed sums to the Club, are entitled to benefit from the initiative of Debt Service Suspension – an initiative which was collectively sanctioned by the countries part of G20. Resultantly, a time-bound suspension of debt service was provided to worldwide countries. The same package was later on extended for a further period i.e. till June 2021.
More Stimulus Means More Burden on the Public
Similarly, the respective central banks of several countries also came to the rescue of banking consumers and introduced relief packages to dampen the effects of Covid-19 crisis which also included deferral of payment on principal loans as well as allowing consumers relaxations against payments of markups for certain period of time. Similarly, the loans were restructured for the well-being of the consumers as well. Thereafter, the governments were required to issue relief packages and in some parts of the countries, the central banks issued more currency notes, knowing that ultimately the burden will be put on the public. Following this approach, most of the countries, also provided for incentives with respect to combating pandemic and keep the economy on the run. For instance, the Government of UK took various steps such as zero stamp duty upon property, reformation of planning laws by introducing Construction Talent Retention Scheme for boosting infrastructure sector. Similarly, Paycheck Protection Programs, Tax Credit Incentives as well as Tax-Free Loan Forgiveness Programs were initiated by the US Government. In Asia, particularly, in India, the government provided several incentives in the shape of low interest rates plus deferred payments.
Colossal Impact of Covid-19 – Days of Doom for Multinationals
But even after this aid and support, the impacts of pandemic were so severe that huge multinationals and world leading brands were exposed and many of them filed for bankruptcy. For instance, Zara closed down at least 1200 stores, Hermes was forced to suspend its business operations at all of its sites based in France, Nike succumbed to massive layoffs, Hertz said goodbye to at least 16,000 employees and thereafter gone bankrupt along with the largest company of trucking, Comcar, Amazon acquired one of the oldest retailers, JC Penny, at throw away prices as JC Penny too had gone bankrupt. Meanwhile, the world’s biggest investor, Warren Buffet, was made to suffer a loss of US$ 50 Billion approximately, US’s biggest mall, The Mall of America, failed to its monthly installments of the loans it had acquired from financial institutions, Emirates – the world’s leading airline – laid off approximately 30% of its workforce and AirBnb was forced to admit that their 12 years of struggle vanished in a span of 6 weeks only.
Rebirth of 1920s Great Depression
It was pointed out by Israel Figa that the world is going through the difficult phase of economic downturn which is far ruthless than the 1920’s Great Depression. Israel Figa takes notice of the statement of Economist Intelligence Unit (EIU) which stated that the lockdowns implemented for containing the massive shock of Covid-19 has brought the global economy into cruelest contraction which has the potential of bringing in worst possible downturn. Even though the World Bank has stated that the world economy would be witnessing shrinkage of 5.2%, however, according to Israel Figa the figures would be much higher than that and may cross 7.5%.
The End or the Beginning?
What else one would do in these circumstances, asks Israel Figa. The answer is you can’t do anything instead of issuing more stimulus package. But those who are not aware that such stimulus packages may look sound for the time being but have ever-lasting impacts and subsequently give rise to higher inflation. According to Israel Figa, the world will soon be made to see the deepest recession which the world hasn’t seen since the end of World War II.