Economic Imbalances Due To COVID-19

Economic Imbalances Due To COVID-19

The world is in a dire situation now, and the situation is getting worse as we speak. COVID 19 has gasped the entire civilization with its clutches, and this time around, it is not letting go.

Imbalances in every aspect of life have now become the most common predicament, and the rules of norms have begun to change their color with unpredictability. To utilize the social and scientific tools available to us in relieving us of the plague of coronavirus leads us to the very truths that govern our evolution as a living being and as a pluralistic entity.

By quite a large amount, international trade, business, economics, and travel are being continually engrossed by the implications of this plague. Due to limited procedural practices internally amongst nations, the case to some extent has remained in the visibility of our understanding. But this includes only the few who have the complete picture, a view towards the future and what it is going to look like going forward amidst this Viral disease. The unbalanced nature of the economy is the most important thing that has come out in the last months; Not only does this suppress the materialistic ventures people are after, but it underpins the very logical systems set in place to deduce the patterns that lie in the most complex of problems created due to the social misconducts and varied ill practices.

Much time is still there to combat and cure this disease, but the real scope lies with the variables, especially the economic variables that are continually affecting Nations. The deviations disperse the solutions to which the answers are already provided.

The cost of providence in times of disparity is the real deal, and as is the case with similar cases from the past, the lessons learned aren’t that big of a deal, and even if it were, then we wouldn’t be in the position that we are standing in. The main criterion remains the economic balances and how these factors are curbed in a cubicle of latent modernization that upholds the laws governing the economy of any nation. To properly digest the implications of economic factors and with quantitative reasons behind the operation of those factors that has become the real cause of the horrendous situation the world is in due to the economic degradation caused by the coronavirus.

An objectification of economic factors: Interest rates, Exchange rate, BOP (Balance Of Payments) and the Recession, Depression, and the eventual productivity of the economy. Four other concerns pertain to our imagination: national product and national income and personal income and disposable personal income. These four small factors must have no role in determining the GNP, net national product, and national income but have become the Authoritative Implication in this modern era.

The expenditures and income approaches yield the same factors of the economy’s final output of goods and services. Every currency of expenditure is matched by every bit of income, so the net figure engrosses the totality output and income. Expenditure the amount spent by the government, consumers, and businesses, while income represents the payment of taxes, purchase of goods and services, and saving. The case has plagued; if not for the reserves and commodities, the world would have pivoted into a realm of nothing.

The purchasing power of consumers has seen a shift of imbalance in this era of COVID-19. Lockdown and curfews have seen business shut down, affecting the employers and the employees, and the cash that was about to be generated disappeared in an empty void. Therefore layoffs and the decrease in income have paved the way for the most evident economic imbalances due to COVID-19. The real problem arises when the imputations, inventory valuation adjustment, and capital consumption adjustment are affected due to the side effects of imbalances due to the coronavirus.

The matter is: The relationship between national product and national welfare. These days, economic instability indicates short-lived departures from full employment from which detailed analysis of full employment and full aggregate supply and demand. The ideal economic outcome comes from income and product flows, and by varying these factors, the zenith of economic reciprocity is reached. But the real scenario is how far has COVID-19 Brought the economy to a state of recession, and concepts such as personal consumption, fixed investment, change in inventories, government purchases, and net foreign purchases have disrespectfully failed in maintaining economic order. It needs not to be mentioned how each of these factors is boiling down and how this has affected the common man.

Some of the last considerations lie in the mentioned factors, but it requires repetition: Interest rates, Exchange rates, and BOP (Balance of Payments), and these very core theories decide the balances and imbalances caused by an external agent and these days known more properly as coronavirus. At first, considering BOP, if outflows exceed inflows, the currency would be under pressure for depreciation; on the other hand, if inflows are greater than outflows, then it would be a case of increment. Balance of payments in some ways indicate the countries capitalistic power and export capacity. However, in times of coronavirus, this has turned upside down, and imports are automatically in free fall and the disability to open up markets in these situations lends a lot of trouble.

The assets that a country has eventually lost its value due to degenerative economic mechanism and the interest rates associated must either increase if borrowing becomes the main concern and decrease if there are problems within the currency’s exchange rate to maintain the economic balance.

To end, exchange rates get affected too as buying and selling of currency are affected because of the disruptions in the stock market. As much as the situation gets bleak, a greater balance will be achieved by us in time.

Engr. Samin Shadman Zahir
Contributor, The InCAP

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