EVERY CLOUD HAS ASILVER LINING.DOES C VID-19,THE DARKESTCLOUD OF THECENTURY HAS ONE?

Novel Coronavirus defines it all….

It is a frenzied situation anywhere you go or read about or talk to. The problem and its impact is such that developed and developing economies are equally impacted, all continents are sailing in the same boat. There’s no set pattern or trend like which part of the world is impacted how much and on what accounts.

India had been very active and features amongst the few countries that have aggressively brought its people back from offshore. So far, the Government of India has evacuated over 1000 people from COVID-19 affected countries. Though a large majority of them is students, however, there are 100 odd people belonging to different nationalities including Maldives, Myanmar, Bangladesh, China, USA, Madagascar, Sri Lanka, Nepal, South Africa and Peru.

A country like Italy with a very sound healthcare infrastructure is faring poorly when it comes to containment and prevention of deaths. Whatever be the underlying factors, a country like India has so far done a decent job though a lot still needs to be done.

1000 people

ITALY INDIA

WHAT ISKNOWN &WHAT IS BEINGDISCOVERED

2. The virus disproportionately affects different age cohorts. Epidemiologists Zunyou Wu and Jennifer McGoogan analyzed a report from China Centers for Disease Control and Prevention that looked at more than 72,000 cases. It concluded that the fatality rate for patients aged 80 years and above was seven times the average, and three to four times the average for patients in their 70s. One other report describes the fatality rate for people under 40 to be 0.2 percent.

1. The virus is highly transmissible. Both observed experience and emerging scientific evidence show that the virus causing COVID-19 is easily transmitted from person to person. The US Centers for Disease Control and Prevention estimate that the virus’s reproduction number (the number of additional cases that likely result from an initial case) is between 1.6 and 2.4, making COVID-19 significantly more transmissible than seasonal flu.

Epidemiologists are in general agreement on two characteristics of COVID-19:

72,000+ cases

80+ years

7x 4x 0.2%

70+ years Below40 years

Sample size

X is the average fatality rate

In a strongly connected and integrated world, the impact of the disease beyond mortality (those who die) and morbidity (those who are incapacitated or caring for the incapacitated and unable to work for a period) has become apparent since the outbreak.

As the number of coronavirus cases continues to rise aroundthe world, there are deep concerns over the potential economic impact of the virus. Some estimates peg the loss at

over 2.5 trillion dollars.

Certain characteristics of the virus are not fully understood, but are key variables that will affect how the disease progresses, and the economic scenario that evolves:

Asymptomatic transmission. The evidence is mixed about whether asymptomatic people can transmit the virus, and about the length of the incubation period. If asymptomatic transfer is a major driver of the pandemic, then different public-health measures will be needed.

There’s no evidence to support one’s belief system that rising temperatures will kill the virus and reduce the impact.

The extent of undetected milder cases. It is now known that many people may show mild symptoms & there is likelihood that many cases may go undetected.

02

03

01

It all started with China and today it has become a pandemic disease. The evolution of the disease and its economic impact is highly uncertain, which makes it difficult for policymakers to formulate an appropriate macroeconomic policy response. China

2.5 TRILLIONDOLLARS

The most immediate impact has been on the travel, tourism and related industries. Flight suspensions, travel advisories, restrictions and bans have all contributed. According to industry chamber CII, this is the one of the worst crisis ever to hit the Indian tourism industry. It has affected all its geographical segments - inbound, outbound and domestic; and almost all tourism verticals - leisure, adventure, heritage, MICE, cruise, corporate and niche segments. The whole tourism value chain across hotels, travel agents, tour operations, destinations, restaurants, family entertainment venues and air, land and sea transportation have been badly hit.

"As the news of the virus started picking up from November, the percentage of cancellations started going up in this segment exponentially and is reaching a peak of almost 80 per cent now in March in many Indian locations. The value at risk from this segment will be in multiples of tens of thousands of crores," the CII assessment report said.

In an impact assessment of the coronavirus pandemic, CII Tourism Committee said inbound foreign tourism of overUSD 28 billion in value terms between October to March has been impacted.

“

With India cancelling all visas, the chamber said the impact "will be worse".

USD 2.8 TRILLIONDOLLARS

It further said, “The forward bookings for the inbound season of October 2020-March 2021 which should have started picking are all muted. These are showing highly discouraging signs with cancellations of important global travel marts which are marketplaces for contracting for the next season."Unless the progression of the virus stops, almost the entire value for the remainder of 2020 season is at risk," the report added.

Not only the service sector but the manufacturing sector has been disrupted and domestic demand in surrounding countries is taking a hit. Many regional economies, such as Singapore and Vietnam, are deeply integrated within regional and global supply chains and China is an important link in these networks. Notably, trade between China and the ASEAN region has grown strongly over the last two decades, so the disruptions in China have impacted production and trade.

If the Chinese economy slows down more than expected, or if the pandemic lasts longer and becomes more contagious than current estimates suggest, the impact on regional economies will be more severe. China has already implemented measures to support its economy, including providing financial support to the affected sectors. Other countries are likely to follow suit.

Skillful use of various policy levers by regional policymakers is more important than ever, given that uncertainty about the pandemic is high and the risk of continuing contagion and a global economic slowdown is rising.

Refineries in China have slashed operating rates by 20 percentage points as they face tank top situations, which translated into lower crude oil demand. It is no surprise that the number of tankers carrying crude oil for floating storage purposes has risen rapidly in the last few weeks.

Greater interconnectedness and interdependence between countries also means that supply disruptions in China have a domino effect on manufacturing activities across the globe, which in turn translates into lower energy demand.China’s oil demand is estimated at 14.7 million bpd in 2019, & it accounted for over 80 percent of global oil demand. The country imports over 10 million bpd of crude oil. These statistics explain the devastation oil markets have faced in the last 2 months. Fewer motorists on the road, flight cancelations & industrial shutdowns mean lower demand for refined products.

It is expected that the auto Industry in India may be impacted adversely to the tune of 8-10 per cent on account of disruption in supplies and inputs from China. However, the impact may be far reaching on the emerging EV industry. China is dominant in the battery supply chain, as it accounts for around three-quarters of battery manufacturing capacity.

Besides Aviation & Hospitality, there has been host of other sectors that havetaken a massive hit.

OIL/PETROLEUM

AUTOMOBILE

20%

The rapid spread of the novel coronavirus globally had already raised the prospects of a hit to the Indian economy via weaker exports and disrupted imports. Rising instances of locally detected cases have added to those concerns.

The domestic pharma industry relies heavily on the import of bulk drugs. India is believed to have imported around Rs. 25,000 crore worth of bulk drugs in FY19. For certain formulations and drugs, dependency on imports from China is close to 100 per cent. Delivery and tracking of consignments are still uncertain within China whether inward or outward.

China is a major supplier both for the final product as well as the raw material used in the electronics industry. India’s electronics industry is fearing supply disruptions, production reduction, and there is an impact on product prices due to heavy dependence on electronics component supply (directly and indirectly) and local manufacturing.

Many garment or textile factories in China have halted operations owing to the outbreak of coronavirus, adversely affecting exports of fabric, yarn and other raw materials from India. The disruption is expected to slow down cotton yarn exports by 50 per cent, leading to a severe impact on the spinning mills in India.It may be mentioned that India already has a price disadvantage against countries like Vietnam, Pakistan and Indonesia which have duty free access to China for export of cotton yarn.

On the other hand, the coronavirus issue in China unfolds a big opportunity for all those industries where China is a major exporter.

PHARMA

ELECTRONICS

TEXTILES

However,despite the dark cloudcoronavirus continuesto cast over the country,there are some silver liningsto be seen.So let’s find the good inall this bad.

Coronavirus is certainly changing the way we live and work in more than one way. Ideas whose time has come:

Are offices to be reinvented going forward- Who knows? Corona has triggered a debate whether mass remote working is the future. People are anticipating lot of behavior changes leading to more efficiencies. Agility is the word if the companies could define the work from home processes.

Remote working options – The transition from open office to the home office is but the natural evolution of workspace. Large entities once believed that productive work could happen only in a formal setting away from home. However, the current market codes suggest that working from home now makes more sense on account of many tangible and intangible benefits that it offers.

Many believe that the situation will change now. People who have for all these years resided in these concrete jungles, the so-called metropolitans, have started introspecting and taking stock of what they have made their lives to be. They are commuting unhealthy distances; there is no time for breakfast, or for exercise.

As work from home grows, a substantial fall is anticipated in demand and therefore in commercial real estate prices. On account of low mobility, the vehicle sales are expected to plummet. Additionally, fuel and power consumption is also anticipated to go down. At the first look, all these seem to be negative signs and would be seen as regressional. But we must accept that there is a problem and that only course corrections and changes in lifestyle and work patterns can make things better.Imagine less people traveling to work yet giving the same output would also mean less use of transport meaning cleaner environments. It could mean happy families as the bonds and time available for family members will significantly go up. There will be no traffic snarls which shall make commuting better and less frustrating.

Is nature through Covid-19 saying that it’s time to change one’s life style, slow down, spend time at home avoid unnecessary outings

and eating outside? Let the environment restore itself!

8%

9%

11%

13%

24%

37%

65%

7%

To take people’s perspective and understand their behavior in the backdrop of Covid, we polled a survey with 800 people aged 18-55 years across 4 cities i.e. Delhi, Mumbai, Bengaluru and Pune.

The survey was taken on 21st of March 2020 before the lockdown.

SURVEY CONDUCTED BY MARKET XCEL

Source of getting updates & information about coronavirus

Precautions being taken

Social media

Publication & news channels

Peer/friends

Health professionals

Others

55%

24%

11%5%

It is seen that social media is the predominant source when

it comes to feeding oneself with information. It is followed by

news channels & publications. Majority however was seen to

follow both Newsfeeds and social media.

Piling of grocery

Avoiding going out completely

Stockpiling of medicines

Continuous use of masks

Keeping children home

Occasional use of masks

Use of sanitizers

Frequent washing of hands with soap & water

Personal hygiene including washing of hands and use of sanitizers emerged in prominence. The key reason attributedfor the said behavior is a Mass Public campaign being launched nationwide and across countries.

67%

Frequency of visits in last 30 days to Restaurants, Malls, Movie Theatres

RESTAURANTS MALLS MOVIES

15%

47%

38%

23%

38%

39%

10%

60%

30%

The responses received show that most people have consciously reduced their outings to restaurants, malls and movies in the during Covid era. A small percentage, however, remains carefree and follows the same lifestyle as earlier in terms of its outings.

While online shopping is coming to the rescue of people during this phase, there are very few takers for food delivery. Due tothe unfounded fear of infection upon consuming meat products among the consumers, the meat market has suffered major losses. Perhaps the only silver lining in online shopping is ‘grocery ‘which has substantially increased

Impact on online behavior for the following

GROCERY SHOPPING

FOODDELIVERY

FOOD DELIVERY

58%

24%

18%

63%

35%

2%

Remained same

Reduced somewhat

Reduced significantly

Remained same

Reduced

Increased

A whopping 83 % believe that the impact of Covid 19 would be felt much longer and rightly so as the number of cases is growing exponentially the world over.

A significant majority are appreciative of the efforts undertaken by the Indian Govt. in containing and managing the disease.Let’s hope that these clouds pass by without rendering any major adverse impact.

How long do you anticipate the impact of the problem will last

How effectively has the Indian govt managed/controlled the Pandemic so far?

Very effectively

Somewhat effectively

Somewhat ineffectively

Very ineffectively

Neither

45%

34%

11%

6%

4%

3%

14%

34%

26%

23%

Few more days

Few weeks

A month

Few month

Longer

Indeed it is a very tough situation for entire mankind impacting close to 90 percent of the countries directly and almost all in some capacity.

Many people have termed this Pandemic as nature’s retaliation and way of correcting the imbalance.

This episode without doubts will leave many scars and unforgettable memories, better we understand that this is nature’s call of warning that we mend our ways else there may be worst planned for the future.

Let’s hope that each oneof us emerge more humane, caring, less materialistic &

more aware ofwhat’s right and what’s not…

if we achieve this feat…we would have seen

the silver lining.

CONCLUSION

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