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The issue which has been at the center stage over the last few weeks is the impact from the spread of Corona Virus/ COVID-19 on overall economic health of global as well as the Indian economy. Initially, thefocus was on the disruption of the global supply chain given that China is at the nucleus. However, it is now clear that this is a large demand shock to the global economy due to the shutdowns and the persistent fear. Global economic activity is likely to fall sharply in H1CY20. Most asset classes worldwide particularly commodities, bonds etc. had started to react to the COVID-19 outbreak right from the beginning of Feb-2020. Equity markets in India and worldwide woke-up to the threat from COVID-19 slightly late, which is why the volatility has been acute over the past month or so. The delayed reaction of the equity market perhaps is a result of the perception of COVID-19 transitioning from being a supply-side disruption to that of a demand shock. Global economic activity is likely to fall sharply in H1CY20. Most asset classes worldwide particularly commodities, bonds etc Read More
