News channels these days, instead of conveying accurate information, focus on adopting means to get more viewers and raise their TRPs. In order to do so, they publish or telecast an overwhelmingly larger proportion of negative news items. As studies in the USA and Australia have shown, about 90% of the news is negative, a huge proportion of them being sensationalist reports. Around 74% of the news stories about Australian indigenous health were negative, while a mere 15% of the stories were classified as positive and 11% as neutral. (Stoneham et al, 2014).

Ever wondered why this is so? Studies have proven that humans show what is known as the negativity bias or negativity effect in information processing. This means that negative events or information are more likely to draw our attention. In a study by Kätsyri J. (2016), gaze tracking, recognition memory, cardiac responses, and self-reports were used to track the attention of 38 participants in a controlled environment. It was found that negative tweets gained more attention and were viewed for longer durations. One of the best instances of this bias was seen when the ‘City Reporter’, a Russian website, lost two-thirds of its readership when it decided to publish only positive news stories for a day!

Framing Effect

News channels and publishers tend to, in fact, not just “report” the news, but make sure they spice it up appropriately to garner and sustain people’s attention. How a particular situation is narrated, that is positive or negative framing, also has an effect on a person’s response (Tversky and Kahneman, 1981). Negative words such as “never”, “die”, “worst”, which have proved to be more eye-catching, is used more by the media, particularly in headlines. There is also an association between gender and valence of the information: women have shown better memory and higher stress reactivity in response to negative news as compared to men (Marin et al, 2012).

Picture Superiority Effect

The media tries its best to evoke emotional reactions through its reports, and to maximize the effect, often uses disturbing and strong images. Everything – from images of dead bodies lying in a pool of blood to detailed descriptions of murder or terrorist attack – is reported sensationally, in an exaggerated manner. Be it Sushant Singh Rajput’s pre-autopsy dead body or gallows in Tihar jail, one can see all such images floating on news channels and social media within minutes of the occurrence of an incident. The reason behind excessive usage of such images is the phenomenon termed as the ‘picture superiority effect’, which means humans tend to remember and recall pictures much better than words. Such images, therefore, are bound to elicit strong negative emotions and hence be remembered by people.

The negativity bias and the framing and picture superiority effects, all combine to cause a range of physiological and psychological effects on people’s minds.

Physiological Effects of Negative News Reporting

Excessive exposure to negative information or news can cause the brain to perceive it as a threat, and as a result, might activate the fight-or-flight response of the sympathetic nervous system. Stress hormones – adrenaline and cortisol – are released in response, which might result in physiological effects of stress such as fatigue and sleeplessness.

Psychological Effects of Negative News Reporting

As compared to positively-valenced or neutral news items, negatively-valenced news also causes heightened anxiety and a bad mood (Johnston & Davey, 1997). As a result, people tend to worry excessively about themselves and their near and dear ones. This, in fact, leads to more problems: people are tempted to check the news repeatedly, which heightens the anxiety and stress, thus forming a never-ending cycle.

Stress is the root cause of a variety of psychological disorders. A positive correlation was found between the number of hours an individual watched negative news and the amount of distress and the possibility of developing post-traumatic stress disorder (PTSD) (Riehm et al, 2020). Moreover, for people who have personally experienced or been victims of any of the events being reported, the negative images and words used tend to elicit flashbacks of their own past experiences, thus making their healing process all the more difficult. This is because of the self-reference effect, or the tendency of humans to remember and recall those events better which are personally relevant or related to themselves in some way. When exposed to arousing bulletins, people hence tend to relate the negative information to their personal contexts (Johnston & Davey, 1997).

Negative Reporting and COVID-19 Pandemic

In the current times, when the world is battling a pandemic and everyone is confined within their homes, with nothing more than a tv screen or a laptop to entertain themselves with, many people are facing one or the other form of social isolation. The effect of the same can be seen in the huge rise in the number of people who reported mental health issues or sought professional help. A 20% increase in mental illnesses has been observed since the beginning of the COVID-19 outbreak in India (Indian Psychiatric Society, 2020). Many people experience heightened levels of stress and anxiety as a result of watching or reading covid-related news. The figure below shows the sentiments evoked by various news headlines related to the pandemic, a vast majority (51.66%) of which evoked negative sentiments, while only 30.46% generated positive sentiments, and 17.87% were neutral (Aslam et al, 2020). The histogram depicting the sentiments, too, is weighted on the negative side.

With covid cases and related deaths reaching a new spike every day, news reporters, in a bid to reveal the mismanagement and failure of the government in handling the crisis, try to portray the situation as negatively as possible. Images and videos of hospitals running out of oxygen, people running around looking for hospital beds and plasma donations, crematoriums overflowing due to the rising number of covid-related deaths, and relatives weeping inconsolably, are traumatizing not just for those currently suffering from the disease, but also the ones who have won the battle against the virus. They fear being re-infected and do not feel safe even inside their homes. In fact, even those who have fortunately not contracted the infection are constantly worried and feel tempted to keep checking the news repeatedly. This may even lead to illness anxiety disorder and hypochondriasis amongst such people. Scarcity and unavailability of vaccines, masks, sanitizers, and protective equipment for frontline covid warriors is a huge cause of concern, leading to fear and anxiety amongst all people alike.

These images and reports haunt people round the clock, leading to nightmares, insomnia, and hypersomnia. Quite often, people wake up screaming, breathing heavily, or sweating excessively, and may even develop long-term sleep problems. About 15% of adult Indians reported some form of insomnia due to apprehensions and concerns related to the pandemic (Lahiri et al, 2021). As shown in the figure below, various factors such as higher age, isolation, generalized anxiety, and known co-morbid conditions were found to be correlated with increased levels of insomnia (Lahiri et al, 2021).

Studies have shown that this could also have long-term effects, leading to a decrease in the overall social interaction, with people being apprehensive about physical meetings even after the pandemic is over. Moreover, people could, in general, become more pessimistic about situations in life and their ability to handle them successfully. They might begin to view events more as a ‘threat’ than a ‘challenge’ since they would begin to feel that they are solely victims of the situation and have no control over it. Their sense of satisfaction with life might also decrease, along with a range of other effects.

Other Common Examples

This is just one of the countless examples we see every other day. Excessive coverage of celebrity suicides and deaths is another common example, the most recent one being the Sushant Singh Rajputs case, which was sensationalized and reported twenty-four-seven for several months following the claimed suicide. What the media did not realize was the effect this could have on young and vulnerable minds who considered this man as their role model. Consequently, a number of suicides of young adults were reported in several parts of the country within a few days following the SSR case. The excessive coverage of the incident hence triggered a series of suicides of ordinary people and celebrities alike, who were later found to be suffering from depression or other mental health issues and began to feel that suicide was a viable solution to their struggles.

Another common media practice is the focus on negative and corrupt political activities and rare reporting of any positive events and practices in the political arena. This has a negative effect on people’s overall belief in the democratic system, and even affects their sense of control over the chosen leaders. The effect is visible in the voter turnout which has recorded a reduction over the years in countries like the USA.

The list of such examples seems endless. The media needs to realize the effects and consequences of the evident bias in their choice and manner of reporting. There is a need to maintain a balance between positive and negative news items. News channels and publications should provide unbiased and unexaggerated information to the people with an aim to make them more aware and informed, rather than trying to increase their own readership and viewership. Only then can we hope to reduce and not aggravate the mental health issues that every fourth person may be suffering from (WHO, 2001).

References

Johnston, W. M., & Davey, G. C. (1997). The psychological impact of negative TV news bulletins: The catastrophizing of personal worries. British Journal of Psychology, 88(1), 85-91.  https://doi.org/10.1111/j.2044-8295.1997.tb02622.x

Garz, M. (2014). Good news and bad news: evidence of media bias in unemployment reports. Public Choice, 161(3-4), 499-515. https://doi.org/10.1007/s11127-014-0182-2

Grabe, M. E., & Kamhawi, R. (2006). Hard Wired for Negative News? Gender Differences in Processing Broadcast News. Communication Research, 33(5), 346–369. https://doi.org/10.1177/0093650206291479

Tversky A., Kahneman D. (1989) Rational Choice and the Framing of Decisions. In: Karpak B., Zionts S. (eds) Multiple Criteria Decision Making and Risk Analysis Using Microcomputers. NATO ASI Series (Series F: Computer and Systems Sciences), vol 56. Springer, Berlin, Heidelberg. https://doi.org/10.1007/978-3-642-74919-3_4

 Kätsyri J, Kinnunen T, Kusumoto K, Oittinen P, Ravaja N (2016) Negativity Bias in Media Multitasking: The Effects of Negative Social Media Messages on Attention to Television News Broadcasts. PLoS ONE 11(5): e0153712. https://doi.org/10.1371/journal.pone.0153712

Schlenger WE, Caddell JM, Ebert L, Jordan BK, Rourke KM, et al. (2002) Psychological reactions to terrorist attacks: findings from the National Study of Americans’ Reactions to September 11. JAMA 288: 581–588.  doi: 10.1001/jama.288.5.581

Lahiri, A., Jha, S. S., Acharya, R., Dey, A., & Chakraborty, A. (2021). Correlates of insomnia among the adults during COVID19 pandemic: evidence from an online survey in India. Sleep medicine, 77, 66-73. https://doi.org/10.1016/j.sleep.2020.11.020

Marin M-F, Morin-Major J-K, Schramek TE, Beaupré A, Perna A, Juster R-P, et al. (2012) There Is No News Like Bad News: Women Are More Remembering and Stress Reactive after Reading Real Negative News than Men. PLoS ONE 7(10): e47189. https://doi.org/10.1371/journal.pone.0047189

Anant Kumar & K. Rajasekharan Nayar (2020): COVID 19 and its mental health consequences, Journal of Mental Health. https://doi.org/10.1080/09638237.2020.1757052

Stoneham, M., Goodman, J., & Daube, M. (2014). The portrayal of Indigenous health in selected Australian media. The International Indigenous Policy Journal, 5(1), 1-13. http://hdl.handle.net/20.500.11937/33658

Aslam, F., Awan, T.M., Syed, J.H. et al. (2020). Sentiments and emotions evoked by news headlines of coronavirus disease (COVID-19) outbreak. Humanit Soc Sci Commun 7, 23. https://doi.org/10.1057/s41599-020-0523-3

Lindberg, S. (2020, May 18). Is watching the news bad for mental health? Verywell Mind. https://www.verywellmind.com/is-watching-the-news-bad-for-mental-health-4802320

The World Health Report 2001: Mental Disorders affect one in four people. (2001). WHO | World Health Organization. https://www.who.int/news/item/28-09-2001-the-world-health-report-2001-mental-disorders-affect-one-in-four-people

Riehm, K. E., Holingue, C., Kalb, L. G., Bennett, D., Kapteyn, A., Jiang, Q., … & Thrul, J. (2020). Associations between media exposure and mental distress among US adults at the beginning of the COVID-19 pandemic. American journal of preventive medicine, 59(5), 630-638. https://doi.org/10.1016/j.amepre.2020.06.008

The post NEGATIVITY BIAS IN MEDIA REPORTING: CAUSES AND EFFECTS appeared first on WISER WORLD.

The associated risks can come from (i) rising Oil prices, (ii) rising interest rates due to fiscal deficit, and (iii) synchronous global market correction as US multi-year economic expansion is behind India.

Bond Interest Rate and the Stock Market

In the month of February, the bond investors were revolting against the bond market interest rate. As a result of which reflation (stimulating the economic output by means of fiscal stimulus or reduction in taxes)- the guiding light of treasuries betting on rebounding growth is proving to be resilient. Long-term Treasury yields touched the highest in almost a year, the market stumbled on the expectations of inflation that accelerated to the fastest pace since 2014 and the yield curve reached the steepest levels in more than 5 years (Bloomberg, 2021). 

The reflation trade paused for a while after the government press release on 10 February showed the consumer-price inflation to be revolving around 1.4% annually, which was lower than expected. According to Michael Pond, global head of inflation strategy at Barclays, the CPI report was a disappointment as it doesn’t change the outlook of investors and there is no expectation that it will change investors’ views about expected inflation (Bloomberg, 2021).

Hence the theme of reflation is based on a story about where inflation will move once the majority of the citizens are vaccinated and demand normalisation. 

Does a Change in the Federal Reserve Interest Rate on New Bonds Stimulate the Indian Market?

After Joe Biden swearing as the 46th US President and taking over his role in the White House, the Fed, the central bank of the US has been closely involved in changing the interest rates on new bonds in the month of February. For an emerging economy like India, these changes have a significant effect. The India investors whose speculations are based on the daily movements in the world stock markets are of the view that the decision of the Fed to decrease the interstate rate on bonds will be welcomed by the citizens as the economy struggles to revive from the COVID-19 pandemic. The ultimate goal is to infuse liquidity in the market so that citizens have cash in their hands which will help to pull up the demand in India. 

The Fed expected its interest rate to be close to zero and signalled that it will remain close to zero in many years to come. This is a part of a long-term strategy that the Fed adopted in the year 2020 that proved to be helpful while navigating a world of persistently low-interest rates that makes it difficult to hit its 2 percent inflation goal (Reuters, 2020). 

A sharp increase in demand as Covid-19 inoculations allow more of the economy to reopen could push inflation above the Fed’s 2 per cent target. If markets push up long-run interest rates a bit to reflect expectations for future faster growth, the Fed likely wouldn’t change course. That’s consistent with the new framework if the economy hasn’t achieved sustained 2 percent inflation by then (Reuters, 2020).

RBI Having a Tough Time in Keeping a Check on Bond Yields

After the release of Union Budget 2021, RBI is under constant pressure to keep the traders of bond calm. Although a higher fiscal deficit was expected, it rose to 9.5% as a percentage of India’s GDP for FY21 and is forecasted to touch 6.8% in FY22. A higher fiscal deficit came as a daunting news for the bond market which led to a surge in bond yields. 

There is an estimate made that the market borrowing of the central government will be at Rs 12 lakh crore in FY22. There is an increased supply of government bonds in the market that could lead to a demand-supply gap, thus putting pressure on yields. The investors in the government bonds are receiving higher yields thereby causing a similar demand on corporate bonds (ET Contributors, 2021). This leads to a rise in borrowing cost for corporates, thereby negatively impacting private investments in the country. In addition, higher bond yields further complicate the transmission process of the rate cut by the central bank (ET Contributors, 2021).

The responsibility now falls on the shoulders of RBI to keep a check on bond yields. In the last bi-monthly Monetary Policy meeting (MPC), there were no announcements made in this regard. As the economy is currently recovering from a recessionary phase, the phase of increase in inflation is getting stronger (ET Contributors, 2021). 

Thus given the current circumstances, RBI would be having a tough time in keeping the check on yields. The central bank has to deal with two-fold problems: on one hand to check the inflation while on the other hand has to handle the market borrowings from both the central and state governments. RBI needs to actively participate in the bond market and communicate well with the market participants in order to ensure that the bond yields are in check. 

Pandemic Fatigue Leading to a Fear of Lockdown

As news around the second wave, COVID-19 pandemic in foreign countries like UK, US, Australia are reaching the Indian households, residents are in a fist that there might be phased lockdown across the states in India. Several states like Maharashtra, Uttar Pradesh, Gujarat and Kerala are recording a spike in COVID-19 cases again which is directing the state and central government to impose night curfews in these states. Cities like Mumbai, Pune, Amravati, Aurangabad, Ahmedabad are already observing night curfews due to a rapid hike in COVID-19 cases. 

In a recent report released by Union Health Ministry, the primary reasons for the growing number of cases in few states were reported as – COVID inappropriate behaviour due to “lack of fear of disease”, pandemic fatigue, missed cases, super spreading events and crowds due to recent gram panchayat elections, marriages, reopening of schools, and crowded public transport.

The Recent INR-USD Change

The US Dollar to Indian Rupee Exchange Rate measures the ratio between the US Dollar and the Indian Rupee. Exchange Rates can be used to measure the relative health of an economy versus another. Exchange rates are also important in corporations that operate worldwide because they will directly impact their financials (YC, 2021).

US Dollar to Indian Rupee Exchange Rate is at a current level of 73.92, up from 72.74 the previous market day (February 25, 2021)  and up from 71.65 one year ago. This is a change of 1.62% from the previous market day and 3.17% from one year ago (YC, 2021). 

F&O Cues

F&O stands for Future and Options. These are the major types of stock derivatives traded in a share market. These Derivatives are the financial instruments deriving their values from an underlying such as currency, gold, or the stocks of a company.

Such contracts try to hedge market risks involved in stock market trading by locking in the price beforehand.

• Nifty February futures ended at 15,195; premium of 22 points 
• Nifty February futures add 1.2% and 1,745 shares in Open Interest
• Nifty Bank February futures ended at 35,854; premium of 102 points
• Nifty Bank February futures add 4.3% and 2,621 shares in Open Interest 
• Nifty Put-Call Ratio at 1.48 Out of F&O Ban: Sun TV Stocks In F&O Ban: BHEL, SAIL 

Brief on FII and DII Trading Activities during February 2021

Foreign Institutional Investors (FII) is the term used for investors who belong to foreign lands and are interested in putting their money in the Indian stock market. These are available in various forms such as mutual funds, investment trusts and pension funds. Domestic Institutional Investors (DII), on the other hand, refer to the investors belonging to India who invest their money in the Indian stock market. This comprises domestic mutual funds, banking and financial institutions, insurance companies and domestic pension funds (Dhanorker, 2020).

Indian stock market attracts millions of investors annually. These investors are primarily driven by institutional money. Both FIIs as well as DIIs constitute the major part of liquidity in the stock market. Therefore the effective tracking of their inflows and outflows are helpful in forecasting the broader trends in the markets. FIIs are believed to have a greater influence on the domestic markets along with the sustained flows from DIIs (Dhanorker, 2020). The countries which constitute a major portion of FII inflows into India are listed below. 

The performance of FIIs and DIIs have been carefully traced to meet the expectations of the investors during the month of February 2021. One of the primary reasons behind this is that the year 2021 will mark the arrival of the COVID-19 vaccine followed by the economic recovery that will see the Indian government taking stimulus measures to cope with the weak performance of the Indian economy during the COVID-19 pandemic. So it becomes of utmost importance to keep a track of previous FII and DII trading activities. 

The above table shows the trading activities of FIIs and DIIs from December 2020 to February 2021. There has been a continuous increase in the gross purchase of FII from Rs. 182 crores (approximately) in December 2020 to Rs. 223 crores (approximately) in February 2021. The gross sales of FII also increased from Rs 134 crores (approximately) in December 2020  to Rs. 180 crores (approximately) in February 2021. This increase was sharp for the month of  January and February because of the speculations surrounding the foreign investors due to the successful release of the COVID-19 vaccine and vaccination of common citizens which ultimately registered a steep increase in the net purchase/sales for the FIIs. 

Similarly, DIIs showed an impressive improvement in their performance as their gross purchases increased threefold from Rs. 84 crores (approximately) in December 2020 to Rs. 104 crores (approximately) in February 2021. Due to the restrictions on the movement across the borders and closing of the economies worldwide, the domestic investors started putting their money in the Indian stock market as a result of which the gross purchase increased. However, the gross sales had reduced from December  2020 to January 2021 2020 but increased during February 2021. 

Conclusion

In my opinion, the COVID-19 pandemic in 2020 delivered some of the greatest shocks to the global economies since World War II. The entire economies have been locked down and people adjusted to the new ways of working, studying and socialising. There are millions of people who have lost their jobs and became unemployed as a result of which inequality and poverty soared. The globalised economies acting as lifelines to billions of people worldwide has suddenly become vulnerable, owing to the disruptions of the global supply chains and government strategies to protect domestic stock market. Given the persistence of COVID-19, the recovery in 2021 will largely depend on how effectively the vaccine is distributed and how the various industry stakeholders reacted to the Union Budget 2021-22. The multidisciplinary robust approach will be required to mitigate the ill-effects of the pandemic and to address longer-term challenges posed by climate change. For this current and former political leaders, scholars, academicians, senior policymakers should provide exclusive analyses of the tasks that lie ahead in order to ensure that we are ready to meet the forthcoming challenges. 

References

Bhise, R. (2021, February 11). February 2021 Stock Market Outlook. investment shastra. https://www.moneyworks4me.com/investmentshastra/february-2021-stock-market-outlook/

Bloomberg. (2021, February 14). Bond market reflation trade absorbs punch to extend 2021 advance. Economic Times. https://economictimes.indiatimes.com/markets/bonds/bond-market-reflation-trade-absorbs-punch-to-extend-2021-advance/articleshow/80906847.cms?from=mdr

Dhanorker, S. (2020, June 29). What stocks are FPIs, FIIs and DIIs buying and selling? Economic Times. https://economictimes.indiatimes.com/wealth/invest/retail-investors-urged-to-stay-away-from-gamestop-inspired-communities/articleshow/80663373.cms

ET Contributors. (2021, February 18). Why is RBI having a tough ride in keeping bond yields in check. Economic Times. https://economictimes.indiatimes.com/markets/bonds/why-is-rbi-having-a-tough-ride-in-keeping-bond-yields-in-check/articleshow/81088372.cms?from=mdr

Reuters. (2020, December 16). Fed will be tested in 2021 as vaccines boost US economic outlook. Economic Times. https://economictimes.indiatimes.com/markets/stocks/news/fed-will-be-tested-in-2021-as-vaccines-boost-us-economic-outlook/articleshow/79751536.cms?from=md

YC. (2021, March 7). US Dollar to Indian Rupee Exchange Rate 73.92 INR/1 USD for Feb 26 2021. Charts. https://ycharts.com/indicators/us_dollar_to_indian_rupee_exchange_rate_h10

The post GLOBAL MARKET ANALYSIS: AN OUTLOOK OF FEBRUARY 2021 appeared first on WISER WORLD.

Nevertheless, such a political crisis is not new to the country. Italy has always been at the centre of political turmoil for decades. It is quite evident with the fact that the country has seen about 60 governments since WWII. Conte and Renzi’s drift has been known to the public for a long time, and hesitation escalating was very much anticipated. So far, the drift was kept at bay by this centre-left coalition due to the coronavirus emergency. However, the pandemic situation has also now escalated, and it seems that it outlasted the political goodwill. [2]

Why Did the Problem in Italian Politics Start?

The reason for this drift started due to the approach of Conte and Renzi concerning financial matters. [3] Back in 2020, the GDP of Italy slumped by about 10% due to COVID-19. [4] Adding on to that, was a stimulus package that was given by the European Union (EU) worth €750 billion that was allocated to several EU nations. In July 2020, Italy was allowed to get the lion share of the EU stimulus package, amounting to over €200 billion (about $243 billion) in a grant and low-interest loans. [5] Because of such loans, Italy is now the second most debt-ridden economy after Greece. [6]

For weeks, Matteo Renzi had criticized the plan laid out by Conte to use the EU funds to use these handout purposes and less on serving the health needs. Even when the plan was improved on Tuesday night as per the request, Matteo Renzi was still not satisfied. Finally, the usage of €200 billion worth of that package was approved during the night of about 12th and 13th January 2021 by the lawmakers. However, the lawmakers of the Italia Viva abstained from voting on it. Also, two members of resigned including Elena Bonetti, the former minister for family and equal opportunities.  Both Conte and Renzi have a different opinion on how this recovery money given by the European Union should be used.

It increased the difference between Renzi and Conte, as the issue became a matter of political vote bank and both the centrists are competing for the same voters. [7]

Matteo Renzi’s move has been met with a mixed response, ranging from anger to confusion to chaos. One opinion poll even suggested about 70% of the Italians feel that this move by Renzi is not due to the difference of opinion, but rather for his political gain. Some experts also state that this move by Renzi may be due to him being side-lined by the coalition in recent times. [8] So, Renzi was doing nothing but using this opportunity to improvise on his political gains.

However, on Wednesday, Renzi argued in a news conference that dealing with the pandemic also meant “solving problems, not concealing them,” He has taken issue with Conte’s strategy for rebuilding Italy’s tattered economy.

Nonetheless, it cannot be denied that Matteo Renzi is a very well-known political figure in Italian politics and holds an even more crucial role in the current government headed by Giuseppe Conte.

Why Renzi Is Crucial to the Italian Government?

Italia Viva was formed by Matteo Renzi in September 2019, after he quit the centre-left Democratic Party. After the populist right-wing League Party’s departure, Renzi and his party played a significant role in forming the coalition government by Conte. The coalition government comprises the centre-left Democratic Party, Five Star Movement (MS5) and the left-leaning parliamentary group called Free and Equal.

According to recent polls, even though Renzi has only 3% public support, his party Italia Viva has 30 lawmakers in the lower house and 18 lawmakers in the upper house, thereby making them a junior coalition partner.

Way Ahead

Renzi had elected as the Prime Minister in 2014. So, he understands how the situation prevails while on that post and how politics needs to be done to rule the state. Not only that, but he also has been known for mediating conflicts among parties having varied political inclination- ensuring that the far-right parties are out of power by making sure that a coalition is created between populist and centre-left parties. 

With the decision of Renzi, there are only a few alternative options that can be viable for moving ahead in this situation. First, that Conte and Renzi come to a compromise by keeping the current coalition government. In other words, without escalating the situation, Conte needs to convince Renzi to support the government. It is still possible as Renzi is still. However, if this does not happen, the country would be on the brink of losing a government in the middle of a pandemic. Alternatively, the Conte government can go through a no-confidence motion. If he loses, the situation of Conte’s government will be like Schrödinger’s cat. In other words, Conte would only be left as the caretaker of the government, and he would also not have much power over Renzi. However, a coalition is still possible. After all, with a lack of public support, Renzi would not want to put his 48 lawmaker seats at risk. Nonetheless, if this not, the situation may move ahead in a different path.

Second, if the coalition government does not move ahead, then considering the pandemic, a government of national unity will be sought to be created by President Sergio Mattarella.

Third, the country could go ahead with the national vote. It would mean that the country may end up going into an election right in the middle of the pandemic. In case of an election, either Conte would win the third term as the Prime Minister, or the far-right wing parties would form the government. The far-right in Italian politics comprises of the League Party and the Brothers of Italy. They have been gaining support for the past few years and hold about 40% of the electoral vote. So, in case an election happens and the far-right wins, then there Italy will have the most anti-European government in Western Europe. [9]

In this way, one can state that Italy is currently in such a political situation that it will not be suitable for the nation if escalated. [10] Hence, sorting out the differences is the best possible way out of this situation.

References:

[1] Italy – COVID-19 Overview – Johns Hopkins. coronavirus.jhu.edu/region/italy

[2] Harlan, Chico. “Italy’s Government Falls into Chaos, Further Complicating the Covid Response.” The Washington Post, WP Company, 13 Jan. 2021, www.washingtonpost.com/world/europe/italy-government-renzi-conte/2021/01/13/dd65f6bc-55c6-11eb-acc5-92d2819a1ccb_story.html.

[3] Roberts, Hannah. “Italy’s Coalition Fights for Control of EU Recovery Cash.” POLITICO, POLITICO, 5 Jan. 2021, www.politico.eu/article/matteo-renzi-giuseppe-conte-coalition-government-recovery-fund-cash-coronavirus/.

[4] Amaro, Silvia, and Sam Meredith. “Italy’s Government in Crisis after Former PM Pulls Support for Ruling Coalition.” CNBC, CNBC, 13 Jan. 2021, www.cnbc.com/2021/01/13/renzi-italys-government-in-crisis-after-former-pm-pulls-support.html.

[5] Speak, Clare. “How Italy Plans to Spend €209 Billion of EU Money.” Thelocal.it, 17 Sept. 2020, www.thelocal.it/20200917/more-growth-lower-tax-for-families-italy-sets-out-plan-for-spending-eu-recovery-fund.

[6] Samuelson, Robert. “Opinion | Why Italy’s Debt Matters for Everybody.” The Washington Post, WP Company, 24 May 2020, www.washingtonpost.com/opinions/why-italys-debt-matters-for-everybody/2020/05/24/12b2f310-9baf-11ea-ac72-3841fcc9b35f_story.html.

[7] Roberts, Hannah. “Italy’s Coalition Fights for Control of EU Recovery Cash.” POLITICO, POLITICO, 5 Jan. 2021, www.politico.eu/article/matteo-renzi-giuseppe-conte-coalition-government-recovery-fund-cash-coronavirus/.

[8] Bozza, Claudio. “Sondaggio: Crisi Di Governo Incomprensibile per Un Italiano Su 2. E per Il 73% Renzi Persegue i Suoi Interessi.” Corriere Della Sera, Corriere Della Sera, 13 Jan. 2021, www.corriere.it/politica/21_gennaio_13/crisi-governo-italiano-due-non-capisce-motivi-il-73percento-renzi-persegue-suoi-interessi-59b0ac42-5515-11eb-89b9-d85a626b049f.shtml.

[9] Zampano, Giada. “Giorgia Meloni Is Rising Star on Italy’s Far-Right Stage.” AP NEWS, Associated Press, 18 Oct. 2019, apnews.com/article/fa37b62daab246f2a9ccb0887284aaee.

[10] “Italy’s Government in Crisis after Junior Coalition Partner Quits.” Euronews, 13 Jan. 2021, www.euronews.com/2021/01/13/italy-s-government-close-to-collapse-amid-row-over-covid-recovery-cash.

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While it has been regarded as a continuum of economic and developmental prospects for Pakistan, it has also, significantly, given birth to a series of domestic economic and political issues in Pakistan. It is an instrument whereby China seeks to establish its hegemony through the combined use of hard and soft power, relying greatly on its “debt-trap diplomacy”. The debt outcome of the CPEC project is already about $80 billion, with 90% of it to be paid for by Islamabad in the form of the national debt. Even though Islamabad is still presenting a rosy picture of CPEC and its developmental prospects for Pakistan, it is well known that it will not be able to pay China back and will eventually lose its sovereignty and become another linchpin in the Chinese debt trap strategy. Experts and media reports have already been referring to it as a “Trillion Dollar Blunder”.

This mega billion dollar project has turned out to be more of a Non-Performing Asset (NPA) for China than a boon, especially when the world has been badly hit by the pandemic. The CPEC has proven to be more of a bogus project that hardly offers any profits with lagging industrialisation efforts and only a quarter of the decided projects completed over the last five years. With China facing an economic slowdown and depleting dollar reserves, it is itself in desperate need of the USD and is trying to woo foreign investors to its financial markets. With the trade war with the US and the Chinese export market facing an all-time low due to the diplomatic distancing and the Western countries’ ire over China’s role in the spread of Coronavirus pandemic, a big blow has been landed on to the Belt and Road Initiative, especially the CPEC project that is greatly faltering and has turned out to be China’s biggest NPA. With the global supply chains being badly hit, the OBOR Initiative is no longer a marker of China’s long-term vision and magnanimity; rather it is regarded as an investment blunder of colossal scale. The CPEC, which sowed dreams of a developed Pakistan with the most profitable and developed infrastructure has and the region into a hub of trade and commerce has instead turned it into a centre of gargantuan infrastructure with negative profitability and zero utility. The Chinese banks and financial institutions have been shirking away from funding the CPEC, as it is evidently nil on profit, given Pakistan’s inability to repay the Chinese loans. 

There is a huge gap in the announced projects of 2015 and completed projects of 2020, with only 32 of the 122 announced projects seeing the light of the day. The CPEC project is lagging behind as it has been facing many shortcomings like lack of funds, trade asymmetries, domestic issues, bad loans for China which does not want to fund the CPEC projects and opposition from Baloch rebels and local who will be directly impacted by this rollout. Large energy projects have been shelved as this NPA faces major bottlenecks due to unsustainable debt levels. China is reluctant to provide assistance as the venture does not provide any returns and is a fund drain. Moreover, Pakistan’s long standing challenges have been aggravated by the CPEC; it entails economic, environmental, social and political costs the state which faces an exacerbated energy deficit, creating a greater dependence for fossil fuels that are harming the environment as well. The CPEC was roped in on its premise of turning Pakistan into a higher-value manufacturing hub, however, what is seen at present is that the huge majority of special economic zones (SEZs) are empty, and the information and communication technology (ICT) projects that were to provide the backbone have been halted and limited. 

Conclusion

Thus, the CPEC is a gamble for China and Pakistan, contrary to their narrative of completing the CPEC at all means. It has already increased Pakistan’s current account deficit and China does not want to invest more where there is no way of recouping their investment and the Return of Investment (RoI) rate shows a gloomy picture. For the Dragon, given the calamitous economic situation Pakistan is in, even the chances of recovery of principal amounts spent by the Chinese financial institutions is a far-fetched dream and thus, the “iron-brotherhood” may be in a jeopardy. The Chinese funds kept Pakistan afloat and prevented it from sinking into the economic doom, however with the funds getting halted and dried up, CPEC faces cost escalations being beneficial for none. Rather than an asset, it has become a liability and has been added to the list of China’s NPA.

References: 

Chinese banks’ reluctance towards CPEC hint towards their funding gap. (2020, August 27). Wion .

Afzal, M. (2020). “At all costs”: How Pakistan and China control the narrative on the China-Pakistan Economic Corridor. Brookings.

Business Standard . (2018, April 17). Pak’s current account deficit rises due to CPEC: ADB report. Business Standard.

Hillman, J. E., McCalpin, M., & Brock, K. (2020). The China-Pakistan Economic Corridor at Five. CSIS.

The EurAsian Times. (2020, July 4). CPEC Project A ‘Trillion-Dollar Blunder’, Pakistan Calls It ‘Outstanding Initiative’. The EurAsian Times.

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Statistics and Figures

It is estimated that there was a steep decline of 23.9 per cent in the Gross Domestic Product (GDP) in the months of April to June 2020, which coincides with the impositions of lockdowns. This figure also becomes significantly grimmer when we compare it to last year’s GDP growth of 5.2 per cent in the same quarter. Similarly, there were other sectors which saw a decline in the Gross Value Added (GVA) of April to June 2020 compared to growth in April to June 2019. Electricity, gas, water supply and other utility services shrank by 7 per cent, whereas they had seen an 8.8 per cent growth a year ago. There was a decline of 10.3 per cent in public administration, defence and other services. These services had seen a growth of 7.7 per cent last year.

But perhaps one of the most shocking figures comes from one of the worst-hit industries – trade, hotel, transport, communication and services related to broadcasting. They witnessed a decline of 47 per cent in the first quarter, compared to an earlier growth of 3.5 per cent. The only positive growth was witnessed in agriculture, wherein the GVA grew at a 3.4 per cent rate compared to last year’s 3 per cent in the same quarter. 

What do these numbers mean?

These numbers tell us that the lockdown brought with it impacts that were not just short term. Driving down GDP to such an extent means that it will take more time to bring it back up. There have been several such long-term impacts – the lockdown caused disruptions in critical supply chains. With limited incomes, the demand for consumer goods fell. The savings of businesspeople sitting at home continued to dwindle. There was widespread unemployment. While people were stranded due to hastily imposed lockdowns, they continued to barely survive and use their earnings on basic necessities. The impact of the lockdown was a significant dent in the growth of the Indian economy.

But in this era of international trade and globalisation, the impact in India cannot be featured in an isolated discussion. The impact on the world economy also negatively impacted the Indian economy. Arun Singh, who is the chief economist at Dun and Bradstreet India said, “A fall in the optimism levels amid heightened uncertainty has led to a ‘double whammy’ – closure of businesses leading to global supply chain disruptions and a steep fall in the consumption.” Until the rest of India’s trading partners and the world economy as a whole doesn’t find its footing, a complete recovery can prove to be difficult.

Why has there been such a huge impact in India?

While all countries witnessed some sort of economic decline, some countries were comparatively quicker to get back up on their feet. For example, the Chinese economy saw a growth of 3.2 per cent in the months of April to June 2020. This was preceded by a decline of 6.8 per cent in January to March 2020. However, India hasn’t been as lucky in its economic recovery. There are several reasons for this, the first being the length and intensity of lockdowns. India had a countrywide lockdown for several weeks and in some regions of the country, it went on for several months. But more importantly, economic recovery goes hand in hand with the number of cases a country has. The sooner a country can drive down the number of infections, the earlier they can go back to reopening their economies. Lesser infections will inevitably mean less spending on healthcare and fewer people out of the workforce. Reopening the economy will not have as much of a positive impact if workers are isolating at home due to sickness. 

The “New Normal” and the Future of the Economy

It is a given that in order to get the economy back, the debate between healthcare and economic recovery needs to be interpreted in a much more multi-nuanced way. Both of these aspects need to go hand in hand. To reap economic benefits, the health of the citizens needs to be taken into account. Efforts in these sectors are being made and these efforts are also proving to be fruitful.

The “New Normal” of the Indian economy will perhaps ironically be the most abnormal of situations our economy has been in – one that is ruled by the stock market and rates like always but also greatly influenced by a disease and the healthcare systems of the country. The new normal will be painted by uncertainty and more fluctuations than usual. Moreover, national recovery will have to be followed by a global recovery as well.

Conclusion

The recovery in India has recently started to look up with reports of economic activity slated to see positive growth of 0.5 per cent in January to March 2021. However, this is dependent on the absence of a second wave in the near future. This further goes to prove the importance of keeping health in mind while pursuing economic recovery. Like almost everything that is related to the pandemic, economic recovery’s solution also includes keeping public health guidelines in place. From encouraging workers to wear masks to making people work from home, the pandemic has completed transformed the scene of economic activity in India and all over the globe and not just ushered in a new normal of the Indian Economy but for every aspect of our life.

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There are several reasons why vaccines are not trusted, including religious and political reasons. This is exasperated by the misinformation that is spread wildly about the science behind vaccines, and the validity of such claims. Ultimately, it all boils down to how much government entities and other community leaders can propel misinformation about vaccines, and the fact that decisions about vaccines might affect the community at large.

Medical Objections Against Vaccinations

A study conducted by Andrew Wakefield in 1998 linked autism to the measles, mumps, and rubella (MMR) vaccine. It was later discredited and retracted, however, this study is still referenced as a reason to not vaccinate children, or has at least kept the idea prevalent. People often believe that vaccines are more harmful than the diseases they might prevent because of their side effects. The same sentiment is being referenced to in recent objections about a coronavirus vaccine. Pharmaceutical companies and governments are moving at record speeds to come up with a vaccine for the coronavirus. However, this is also fuelling uncertainty and hesitancy about vaccines.

The common folk is worried about compromising quality in the race for a vaccine, and some experts agree: Oksana Pyzik, who is a senior teaching fellow at the University College London School of Pharmacy says, “The fact that it’s being crunched into such a short period has been a cause for concern”. There is also a large mistrust of big pharmacy companies at play here along with a general mistrust against science and experts. People believe that the science that is provided in support of vaccines is either falsified for profit or can be proven incorrect in the future. In the case of the coronavirus vaccine, trials are being conducted one after the other without time to properly gauge the implications of the previous trial. Vaccine development can take decades; hence it is only natural that there are doubts about the safety of a coronavirus vaccine developed in less than a year.

Religious and Political Objections

Vaccines can also bring religious objections – the MMR vaccine and the rubella vaccine had been previously derived from fetal tissue. Opposition to abortion present in religions such as Hinduism, Islamism and Jewism can translate into opposition to vaccines. Religious reasons such as these are brought into play when we consider the fact that schools grant exemptions to children based on religious grounds. Schools might continue to do so even when a coronavirus vaccine comes into being, which can be a concern for overall public safety if parents want to send unvaccinated children to school citing religious objections.

Objections to a vaccine are often part of a bigger picture which includes discourse on government intervention. Opinions on a vaccine can vary along party lines, with 81% of Democrats and only 51% of Republicans keen to get vaccinated in the United States. Certain people can value individual liberty and not want the government to intervene in vaccination-related decisions, which is why Dr. Anthony Fauci, the director of the National Institute of Allergy and Infectious Diseases since 1984 said that the United States will not make a coronavirus vaccine mandatory. The idea that vaccination is increasingly becoming compulsory in order to attend school is, in turn, fuelling the anti-vaccination sentiments. People valuing freedom are interpreting this as an infringement of their rights. A study titled “The psychological roots of anti-vaccination attitudes: A 24-nation investigation” found that there is a correlation between anti-vaccination sentiments and “reactance” which is described as “the tendency for people to have a low tolerance for impingements on their freedoms”. 

Coronavirus Vaccines and Future Steps

Dr Anthony Fauci has also said that a vaccine taken by only two-thirds of the public would not create the herd immunity we want – in order for economies to get back up and running. In uncertain times such as these, one of the ways to vaccinate people is to either have governments make vaccinations mandatory. Dr Fauci’s previous comment about mandatory vaccination being unlikely in the United States could be indicative of an approach many countries could take. In such a scenario, it is important that there are discussions and discourse regarding vaccine safety. 

People often do not rely solely on doctors for medical advice, or at least have different sources than can influence their medical decisions. There needs to be a coming together of leaders in the community – religious leaders, celebrities and politicians – in order to combat misinformation and to encourage people to get vaccinated. Secondly, it is important to address religious concerns. Though most religious organizations do not actively oppose vaccination, there is sometimes opposition to vaccination in certain religions. Religious leaders could be instrumental in combating vaccine hesitancy – against coronavirus and other preventable diseases. 

Such a sentiment on discourse about vaccines is best represented by Dr Mike Ryan’s quote. Dr Ryan, who is executive director of World Health Organisation’s health emergencies programme, said that people need to be allowed to have conversations about vaccines – “It’s not a one-way street. It’s not about shoving things down people’s throats. It’s about having a proper discussion, good information, good discussion on this and people will make up their own minds,” he was quoted saying.

Properly publishing information on how vaccines are developed and how safe they are can quell medical objections to vaccines. Propelling rumours and misinformation is important – despite the sped-up process, vaccines are still going through required checks and tests before being made available to the public. Moreover, data from trials is being verified from other sources too. People often have worries about the authenticity of medical equipment. For example, the WHO says that 1 in 10 medical products are either fake or below a certain standard. This is all a part of the mistrust people have of “big pharma”, and even the government. Conspiracy theories have cropped up saying the government might inject microchips in the vaccines. Such rumours increase vaccine hesitancy and need to be combated by emphasising the importance of vaccines in public safety.

Conclusion

All efforts and resources including medical personnel, money and infrastructure that is being put into the development of a coronavirus vaccine will be in vain if people refuse to get vaccinated if and when a vaccine becomes available. Making the vaccine mandatory is something a lot of countries might be unable to do. In this situation debunking conspiracy theories and having trust in public safety experts and doctors is crucial. In fact, it is important to trust medical experts in all matters related to vaccines. Even the WHO has included vaccine hesitancy in its list of top 10 global health threats and that goes on to show how important it is for discourse to happen on the importance and safety of vaccines. 

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It can be clearly seen that the preceding economic condition was nothing to boast about and already a national concern, but with the current pandemic scenario, not only did we lose all hopes of recovery, the country is now expected to go into an even deeper state of recession.

The financial stoppage in India, quickened by the COVID-19 pandemic, is compromising the occupations of millions, and will as per moderate evaluations drive a million others into miserable neediness. However, there is an improbable partner in India’s fight against neediness and loss of riches – religious freedom and social harmony

“The social side cannot be viewed as different from the economy side. Not only is social harmony desirable in itself, but it is also necessary for investment to flourish and generate growth. In an autocratic system, dissent is more easily suppressed, but in a democratic environment it cannot be suppressed and this means it is important for the political leadership to work hard to create harmony.”- Montek Singh Ahluwalia

However, the scenario is not the same with India since religion has been a matter of conflict since ages. The government needs to ensure that social harmony is being kept and this topic is just too important to be ignored.

Freedom of Religion and Resulting Consequences

Freedom of religion in India is a fundamental right that is guaranteed to every citizen by Article 25-28 of the Constitution of India. It includes the freedom of conscience, the right to practice, propagate and profess any religion of their own will. As many as 172 countries have signed the International Covenant on Civil and Political Rights that protects the right to freedom.

However, since the faulty implementation is one of the basic root causes of any failed scheme, act or campaign in India, so is the application of the above law. Several incidents have been reported where this basic right has been violated in the past and even in the present.

There have been uncountable conflicts happening in India just because of religious disparities whether it entails the destruction or disrespect of someone’s place of worship or their religion itself.  This has resulted in violent attacks and led to a huge toll on the country’s economy with shops being put on fire and resting curfews that slow down economic activity. Social and religious instabilities and conflicts hamper the economic growth, be it the conflict over Ram Mandir or Attack on Indira Gandhi in the late 70s. Communal violence has been one of the weaknesses that result in the loss of millions of lives.

Deviation from the Crucial Problems

There are a variety of issues such as inadequate healthcare, unemployment rates that are soaring high, illiteracy, protection and empowerment of marginalized communities, systematic corruption, eccentric climatic patterns, poverty and sanitation problems for the urban slum dwellers which require resources and hold vital significance in any country’s agendas. However, with the rising violent conflicts in the country, resources get spent to bring the situation under control and are further utilized in the redevelopment of affected areas. This results in increased government spending and hence the focus shifts from the critical areas of concern to such social disputes.

Violence cost the Indian economy $1.19 trillion (over Rs 80 lakh crore) in the year 2018, in constant purchasing power parity terms, which amounts to roughly $595.4 per person, according to a report prepared by the Institute for Economics and Peace based on an analysis of 163 countries and territories. Also, in 2017, violence impacted $1,190.51 billion to the Indian economy, 9 percent of the country’s gross domestic product or $595.4 (over Rs 40,000) per person. On the other hand, government allocation on the education sector has been only a small portion, nearly 3 percent or even less some years, which is an essential need for the county to progress and develop.

The given data pretty much concludes the fact of how resources reduce for rather crucial issues when social harmony isn’t maintained. It is rumoured that many times such conflicts are the fruits of political disputes and conspiracies. Even the focus of the policymakers and thanks tanks gets diverted to such issues and the crucial issues go rather ignored. It has been suggested in many research works that social and religious conflicts hamper the economy as well as the overall development of the country gravely.

Impact on Investment and Foreign Relation

Even trade negotiations, political relations, and allies also get affected because of these disturbances in the social harmony as the various conflicts sometimes lead to a portrayal of poor image for the country.

It has been observed in various studies that countries that have low levels of religious malice and restrictions put up by the government are ranked higher in terms of education, technological readiness, financial markets and many more important parameters that define a country’s growth and development. China even boasts of not having democratic reforms as it believes that just hampers the nation’s economy and leads to dissent and chaos in the country. Investors tend to be happy with countries where social and religious harmony prevails.

“There is disappointment with India and increasing caution among investors since the last election,” said John Lau, Hong-Kong based head of Asian Equities at SEI, which has $352 billion under management. “The recent political moves and laws have distracted the government from economic reforms,” Lau said the disruptions had led SEI to cut exposure to the South Asian nation to below benchmark levels.

In February, as protesters blocked streets for the third straight month, WisdomTree Investments Inc., the US-based fund with $64 billion under management — said it is concerned rising political and social tensions will delay the country’s economic recovery. Western Asset Management Co., the $453-billion investor and affiliate of Legg Mason Inc., said in January — less than a month after protests intensified — that it was reducing its Indian government bond holdings after tensions around a new citizenship law and the Kashmir region.

These incidents show how investment suffers as a result of social and political issues and thus hampers development. When any protest or conflict takes place, a situation of uncertainties tends to dominate and becomes unappealing to the foreign investors especially. Foreign Direct Investment thus suffers greatly.

Environmental Issues

Moreover, social issues such as the environment have been completely ignored by many companies and industries. A possible reason for the same is that environmental degradation is not subtracted from the country’s GDP and the amount of pollution and toxic waste generated does not have any impact on the GDP. This portrays that although the industry might be severely polluting the nearby water bodies, as long as it is generating goods and services, and adding to the GDP it isn’t a matter of concern. But in the long run, environmental degradation would bring town the economy as a whole as many industries are consumers of natural products such as agricultural products, water bodies for all cleaning and production purposes in industries and other raw materials which are necessary for the manufacturing industry. If the supply of these materials is disrupted because of environmental problems then the economy would eventually slow down.

Imports in the country already supersede the exports and the country thus runs a huge trade deficit which is yet another challenge for the Indian economy. If the supply chain gets disturbed, we would have to again increase the imports followed by a decrease in exports which would further increase our dependency on other nations.

Conclusion

Thus social harmony needs to be given special consideration by the government along with environmental aspects if we wish to develop our economy and achieve the target of getting to a five trillion dollar economy by 2024-25 as envisioned by the government of India. The current GDP growth is already way lower than required to achieve the goal and hence relevant steps need to be taken by the government.

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Current Situation

Over time, the process was expected to create a robust global economic powered by the mutual economic and social cooperation. However, this expectation soon became a distant concept as the world’s economy struggled to overcome disturbances caused by a number of political and economic setbacks that permanently disturbed the socio-economic fabric of society. Most recent of these events being the novel Coronavirus. The crises we face today is unlike any other we have experienced earlier, forcing us to question the existing international systems, and with that the concept of globalisation. On the other hand, there are those that have come to coin the present situation as, ‘Globalisation’, signalling a return to globalised world post the pandemic. There exists no doubt about the fact that the Globalisation has connected not only industries and business, but it has done away with social, economic and political borders, that has allowed for the free flow of intellect, capital and resources. While this has acted to the benefit of many nations, a number of people have been extremely vocal about the fact that the process has enhanced the vulnerabilities of nations by making them over-dependent on the global supply chain. Loopholes and drawback of this nature have been further highlighted by the COVID 19 pandemic, as underdeveloped and developing nations have been left struggling to meet the demand of essential items such as masks, sanitisers and medicines. In the past few months itself, we have recorded a 13-32% decline in merchandise trade, a 30-40% reduction in FDI and 44-80% reduction in International air travel. 

Future of Globalisation

Seeing the present situation, that has resulted in a major role back on the gains made by globalisation in the previous two decades and a fundamental collapse of the international market integration, many have come to envision the world in the post-pandemic days. The most obvious answer to these questions seems to be that, leader shave to plan for and shape a world where both globalisation and anti-globalisation pressures remain enduring features of the business environment. 

It is too early to say, if whether the world is done and dusted with the concept of Globalisation. However, recent statistics and forecasts, predict that the concept should be in currency following the end of the pandemic. However, the nature of the same might be different from what we have experienced previously. The pandemic that had a universal impact, left all national economies in shackles, then whether it be the United States or some of the richest European nations. The economic recovery has been the top priority for all countries. However, such robust economic growth can only be pursued once the pandemic has been brought under control. Viewing the economic trends prior to the pandemic, it is clear that globalisation is an important agent in the growth and health of nations. Countries higher up in the DHL Global Connectedness Index tend to record faster economic growth. There is well-founded evidence to the fact that well-connected countries have a more advanced medical system, making them less susceptible to infectious diseases and put them in a better place to deal with the same. This goes to show that the negatives of globalisation, can just as easily be turned into positive contributions, by investing in health, growth and international cooperation. 

Global Growth

The COVID 19 pandemic has added fuel to the fire, by further destabilising an already fractured world. The pandemic introduced new levels of complexity, an example of which is the national restrictions and differing government response policies, which have further highlighted the differing ideological grounds. However, it is but natural to assume from here on forth that the global socio-economic environment will be driven more by factors based on regional competition, domestic self-sufficiency and when it comes to transnational companies and organisations, the country of their origin will decide the nature of policies they will adopt. Even as the lockdown restrictions have begun to ease we have seen that short distance and domestic trade have recorded a stronger comeback than international trade, hence the importance of regions should not be underplayed and the possibility of stronger domestic and regional trade flows should not be completely forgone while envisaging a new world order.

Technological Advancements

As the pandemic disrupted the status quo, forcing us to adapt to and adopt new ways, it invariably led to the creation of new technology and adoption of e-commerce, videoconferencing and robotics. Before we were faced with the challenge of dealing with a world pandemic, it was a commonly held belief that strides in technological development may not lead to an increase in global flows. However, recent times are a complete antithesis to that belief, as the cross border, e-commerce has come to expand export opportunities for smaller companies, and forced experimentation with remote work could spur more service offshoring. In planning ahead, for the post-COVID 19 scenario, business leaders have to think creatively by taking a structured approach to consider both internal and external implication. For most companies, technological trends should lead to more globalisation in some areas and less in others, rather than a uniform shift in one direction or the other.

Public Perception

Public Opinion towards globalisation has taken a hit, calling back the strong support trends as international trade and immigration had received in the last two decades in particular. The fact that international travel has led to the spread of the virus and the increasing economic stress has resulted in trade protectionism, politicians have used this in their favour to consolidate support against globalisation and the evils that it has introduced into our polities. In these uncertain times, citizens and more important customers and employees have turned to corporate leaders to make a statement regarding globalisation. The rise of anti-globalisation and anti-capitalist movements, as the virus spreads globally has further complicated the role of businesses in the public debate about globalisation. The need of hour requires us to focus on the real economic contributions and how they can help support a healthier form of globalisation. 

Conclusion

A tremendous challenge lies ahead of us, to transform the current world order by regulating and weakening the burdens of globalisation. As the days have passed it has become clearer to us that we have to create a mechanism to respond to diseases through effective international cooperation, without retreating back to the evil of ethnocentrism. Covid-19 effect on the globalisation can be seen more as a bend, rather than a permanent break. Attention to the drivers of globalisation, can lead and navigate companies through and even profit from the turbulence. It is now that the value of globalisation in the form of international cooperation can be portrayed to ensure a suitable and stable future.

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Past Challenges

The economic and social exploitation of the continent’s resources for decades along with horrendous violence and poor administration by corrupt leaders leading to widespread poverty and untimely deaths, which could have been prevented, has greatly contributed to its present economic scenario of Africa. Africa has witnessed one of the biggest cruelties of humanity, slavery. African slaves were supplied to American plantations which not only led to the loss of welfare due to denial of basic Human Rights but also hindered progress due to scarcity of labour in Africa. The anti-slave legislation solved the problem of scarcity and brought about a major change in the continent that led to the expansion of tropical agriculture in the economy.

However, that did not guarantee good days for Africa because, soon, they came under Colonial Control. The colonizers plundered their resources, worked them to death, impeded growth and development, and projected Africa as an economically weak continent in the global economy. They employed Africa’s necessary resources in the production and export of cheap primary commodities and raw materials only, which forced them to import the expensive manufactured goods which caused unequal trade transactions and greatly increased the trade deficits. The colonial rule has had serious long-term consequences on the economy of Africa and has greatly contributed to the underdevelopment of the continent.

Africa’s commendable growth potential is evident from the way it has bounced back from decades of torture and exploitation and maintained a somewhat average growth rate of 5% since 2000 in the Sub-Saharan region. This shows that Africa has the capability to increase and sustain its growth despite facing adverse conditions.

Present Scenario Due to the Pandemic

Despite not achieving the desired growth in 2019, forecasters were hopeful about the acceleration of growth at a stable rate, with an increase to 3.9% in 2020. However, due to the sudden onset of the pandemic, all prior forecasts have been rendered futile. New predictions state a sharp contraction in the Real GDP by 1.7% in 2020, indicating a 5.6% fall from the previous forecasts. These predictions are valid only for the short-term impact of the virus. If it were to last beyond the first quarter of 2020, then GDP would contract by 3.4%, i.e., a 7.3% fall from the previous predictions. This fall in GDP is accompanied by a 5% sharp rise in headline inflation due to supply-chain disruptions, thus, putting the economy in a state of stagflation. However, there is scope for the internal stability of the inflation rate due to immense fall in aggregate demand.  

Challenges Being Faced

Effect on Fiscal Deficits

The pandemic will lead to a great cyclical increase in fiscal deficits in Africa. It will happen in a two-fold process of decreasing government revenues and increasing fiscal expenditures to boost demand in the economy. In 2020, the deficits have been predicted to rise to 8% – 9% of the GDP, depending on the severity of the situation.

From the pandemics and other crises of the past, it has been noted that government revenues fall more rapidly than economic activity. Situations are more likely to worsen and be volatile to COVID-19 shocks due to the ineptitude of the administration in successfully implementing proper policy reforms to ensure smooth flow of government revenue.

Effect on Poverty

If there is a continuation of the prevailing trends, Africa will not be able to do away with extreme poverty by 2030, as planned before.  Taking into account the current scenario, there have been estimations that poverty will only fall to 24.7% in 2030 from 33.4% in 2018, which is still way above the 3% Sustainable Development Goal Target. Figures in the Economic Outlook of Africa (2020) indicate that the number of poor people will merely fall by 8 million, from 429.1 million in 2018 to 421.2 million in 2030. Only North Africa is expected to somewhat meet the 3% target by 2030.

However, the process of eradication can be sped-up by accelerating growth and development in the continent and taking measures to increase the social well-being of the people. Aggregate personal consumption needs a massive boost, of about 10% per annum, to help achieve the target by 2030. If these measures are not implemented properly then poverty eradication will remain a distant unachievable dream for the continent.

Other Challenges

There are other challenges being faced by Africa at the moment like increases in the debt burdens and fall in remittances and Foreign Direct Investment (FDI). Several countries in Africa have high debt-to-GDP ratios which are projected to drastically increase in the onset of COVID-19 and possess the risk of transforming to a sovereign debt crisis if not dealt with properly. In addition to it, remittances and FDI which constitute a dominant financial flow to Africa have been falling during the pandemic. This poses serious threats to the African economy and makes it vulnerable to economic instability.   

Policies to Ensure Stability

The African Economic Outlook (2020) suggests a few actionable policies to not only improve the quality of growth in Africa but also combat the impact of the pandemic. They are as follows:

• The government should ease the main constraints to productivity like poor infrastructure, uneducated and unskilled labour, poor administration, and others. Relaxing these constraints through adequate policy will guarantee growth revival.
• Governments across the continent should take adequate measures to not only stop the spread of the coronavirus but also economic stability by formulating and implementing a variety of combined fiscal and monetary policies.
• The fiscal and monetary policies should work hand-in-hand to collectively help in the revival of the economy. The fiscal policy should keep the debt buildup in check and provide a massive boost to aggregate demand and the monetary policy should work towards maintaining a stable inflation rate and minimizing exchange rate fluctuations. 
• There must be a shift from low-productivity informal sectors to high-productivity formal sectors which would help utilize the untapped resources of the economy.
• Despite the moderate growth of Africa over the past few decades, the quality of growth has been far from inclusive. Only a combination of rigid structural reforms by policymakers can accelerate Africa’s growth and improve its quality and inclusiveness. 
• Even if there is reduced scope for increased gains, policymakers should implement measures to sustain the gains already achieved in the past few years including macroeconomic stability, minimum fluctuations in exchange rates, and others.
• The government should increase the welfare of the people amidst the pandemic by providing proper healthcare benefits to labourers in the form of paid sick leaves and ensure income safety to those sick or quarantined and ensure job security to all who are suffering to check the increase of unemployment.
• The government should also facilitate Universal access to financed health services for everyone irrespective of their sector or employment status.

Conclusion

The Global Health Security (GHS) Index shows that 33 African countries are inadequately equipped to deal with the threats of the pandemic from a clinical perspective. However, Africa might stand a chance to stay strong in this adversity if proper arrangements can be made for rampant testing across the continent at affordable costs.

The future conditions of the economy depend on the competency of the governments to deal with the issue at hand. If the economies can uphold their resilience at this time, there is hope for a speedy revival and acceleration of the growth of Africa. This resilience can be maintained via effective structural reforms, to keep high debts and deficits in check, and minimal vulnerability, in the form of external reserves, to be able to finance imported advanced medical consumables and to make them available to the public. Thus, there has emerged an urgent need for policymakers to implement drastic reforms to strengthen resilience to be able to withstand shocks at all levels, be it macroeconomic, microeconomic or household levels.

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Recent Economic Troubles

Britain experienced a 20.4% month-on-month contraction, with a further 5.8% drop in March, which left the economy in tatters, eroding eighteen years of growth, in a mere two months. The vital services sector, which makes up the bulk of the English economy, was 24.2% down as compared to the pre-pandemic days. The manufacturing sector, which was severely affected by the social distancing norms, saw a functioning of 22.3% lower than its levels in February. Taking into account the following figures and the fact that the total economic output underwent a decline by 24.5%, the Organisation for Economic Cooperation and Development has said, “Britain, with its huge services industries which have been hit hard by the social distancing measures, could suffer the worst downturn among the countries that it covers, with an 11.5% contribution this year. Official figures have hinted that the economic impact brought about by the Virus is so devastating that the GDP may not recover till 2024.”

On that note, the Annual Fiscal Report published by the Office of Budget Responsibility, says that as the government winds down its furlough wage subsidy, unemployment in the country would rise sharply. This unemployment would be the product of the redundancy brought upon 10 to 20 percent of the 9.4 million jobs covered under the furlough scheme. Against this backdrop of rising unemployment, the economy is predicted to be 3 percent smaller than the predicted size for the year 2025. Economists, trade unions and businesses have warned against a long and uphill road towards recovery and one marked with substantial economic turbulences. The slight economic improvement in May was a result of the release of pent up demand, rather than an optimistic sign of economic recovery. The UK economy might display short term signs of improvement, but this may not last long, owing to the permanent scarring caused by the pandemic and the decline of the government’s fiscal support as the restrictions are eased gradually.

Hopes of an Economic Recovery

However, with the relaxation in the restrictions, Britain is seeing a ray of hope, as the economy is recovering faster than it was predicted to do so. Even if we assume the continuation of some restrictions, the British GDP is expected to grow by 6.5% by 2021. British economists and most notably the Chief Economist of the Bank of England, Andy Haldane has emphasized a recovery pattern, which he sees the British economy follow post this crisis. The pattern that Haldane has been expounding can be termed as the V-shaped recovery, where rapid economic growth is experienced following a steep downturn in economic activity. Expectations of a more rapid recovery, than what had previously been predicted, has led markets to achieve one of the strongest quarters on record. A prime example of this is the FTSE 100, in the UK rebounding by 9.1% over the quarter.

The biggest factor contributing to recovery, is the sooner than expected, materially faster and strong consumer spending. However, the Bank of England has emphasized the fact that the most important thing for the country to avoid is a repeat of high unemployment rates, as experienced in the 1980s. However, there persists the fear also mentioned by the Bank of England, that a rapidly growing economy may fuel the fire of inflation.

Job Retention Scheme

In an effort to plan for a speedy economic recovery, the UK government has diverted tremendous efforts coupled with an array of resources to preserve jobs. The government is of the belief that by doing so it prevents the long process of reattaching individuals to employers and jobs, allowing people a simple return to their work once restrictions have been relaxed. Within the scheme, the government pays for 80% of the employees’ salaries. In the month of May, the number exceeded 8.5 million, effectively bringing in 30% of the private sector workforce under the government’s monetary protection. Experts have predicted that had it not been for the Job Retention Scheme, the country would have experienced an unemployment rate of about 20%. However, the problem has not altogether been avoided as even with the scheme the unemployment levels are said to rise to 8% in the second half of the year. This is especially true for large cooperations who will have to make tough decisions regarding redundancies, owing to the lack of demand in the long term.

Conclusion

However, the return to pre-pandemic levels of activity is going to be severely affected by the permanent scaring done to the economy. Numerous businesses have failed in the time since the world pandemic began and many more are predicted to fail during the recovery phase when demand and revenue are still weak. This is due to the simple reason that during times of recovery businesses tend to look for additional working capital to finance inventories and growth, but recent trends have shown that banks might not be willing to extend loans to those businesses which they might consider weak or too vulnerable to economic shocks. Across Europe, we estimate that default rates in the speculative-grade category alone could rise to 8.5% by March 2021, from 2.7% in April. The following statistics provide a sufficient indication of the failure rates in the UK. Business failures have a knock-on effect on the economy. This happens when businesses fail, train relationships will end, supply chains will be broken and the production capacity will shrink. These factors deter the economy from growing back to its full potential and achieving the economic levels as seen during the pre-pandemic days. For the long term, things are still not very clear, there is a high possibility of the world adapting in such a manner that we see the emergence of new businesses, that might replace the struggling ones right now, and boost the capacity and long term growth potential.

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