COVID 19:THE

GLOBAL
SHUTDOWN AND
FISCAL
RESPONSES TO
COVID 19

G R O U P 3
www.reallygreatsite.com
INTRODUCTION

Unprecedented Diverse Fiscal Measures

Economic Downturn

Varied National Complex Policy Trade-

Responses offs
INTRODUCTION

International Central Bank

Collaboration Interventions

Fiscal Preparedness Resilient Economic

Frameworks
HEALTH CONCERNS

Symptoms of the virus included dry cough,fever,shortness of breath,muscle aches,

unexplained loss of smell or taste ,diarrhoea and headaches

Older people and people with comorbidities were most affected but younger populations
including children were also susceptible to become seriously ill

Transmission of virus occurred mainly via respiratory droplets

HEALTH CONCERNS (CONT.)

Even asymptomatic people could transmit the virus, adding to concerns

Vaccine developments were in place by organizations such as Moderna(using RNA

technology), Inovio(DNA technology) , J&J and Novavax(using traditional approach)

Concerns were raised regarding potential side effects of vaccinations and disease
enhancement if vaccines were made available without proper testing
Government Policies and Containment Measures

CHINA IRAN EUROPEAN

UNION
Wuhan, the epicentre Being one of the hardest Decentralized
Robust black measures
was quarantined and hit countries in the Middle were adopted. While
markets
760 million people were East. Containment countries like Denmark
ordered to stay home. measures were delayed and Norway adopted
From March 28,2020 by their government lockdowns, Sweden did
entry of foreign nationals leading to alarming rise not enforce such strict
were suspended. of cases and 2000 measures.
deaths in a month.
Government Policies and Containment Measures
(CONTD.)
UK
ITALY USA Initially adopted “Herd
immunity approach”.
However alarming rise in
cases and deaths forced
Draconian policies were Containment measures them to
Robust backtrack
black
adopted to curb the were delayed by lack of markets
spread of the virus. On coordination between
March 10, the country was the federal and state INDIA
placed under national governments. The pandemic was taken
lockdown. Fragmented policies and seriously by the government.
messages by governors However sudden
as well as President announcement of lockdown
Trump made USA the greatly affected the most
global leader in COVID. vulnerable sections of society
Robust black
markets
ECONOMIC DISRUPTION - SUPPLY SHOCK
• To ease the burden on health systems lockdowns were implemented by policymakers. The ensuing
economic effects were huge

• China’s lockdown caused a slowdown in production of goods that severely affected the countries which
relied on its components

• As restrictions spread across China 95% of the Fortune 100 firms ,had to face supply chain disruptions

• Another major challenge was the availability of supply of medical equipment and Personal Protective
Equipment(PPE) kits.

• Essential supply chains such as agriculture were also affected. For example, UK which received 80000
overseas workers ton pick crops every year had only 1/3rd the number available in 2020

• Pollination via imported bees were affected due to travel restrictions which prevented movement of
beekeepers

• Meat supply chain was affected due to the closure of slaughterhouses

• Overall, the supply chain of most companies and industries , including essential goods and services were
affected by the pandemic
 ECONOMIC DISRUPTION - DEMAND SHOCK
• For the first time since the Great Depression, both wealth and developing economies were in recession

• The cumulative output loss was projected to be 9 trillion dollars

• As workers were laid off labour demand decreased and the combination of shocks greatly amplified the
challenges of the global economy

• China, the epicentre of the virus was looked at for consumer confidence levels. Whereas by March 2020
industrial output had rebounded, the amount spent by consumers reduced by 1/6th year on year

• Even in Europe, a similar lack of retail spending highlighted low consumer confidence

• The World Trade Organization(WTO) predicted a global trade volume contraction between 13-32%
compared to the previous year

• The lockdowns also had a major effect on the demand for fossil fuels. Oil prices fell to historic lows
.
• In developing countries, the situation was especially dire. Countries like Haiti and Nepal, which were highly
dependent on remittances collapsed during the pandemic
FISCAL POLICIES ADOPTED - AMERICA
• Between March 14 to March 21, 2020 weekly unemployment claims soared from 282 thousand to 3.82 million

• The major challenge in creating a fiscal policy was the division of powers in USA’s government and the
jostle of power between the Democrats and Republicans

• Between March to July 2020, 3 pieces of legislation were introduced.

• The 1st was the Coronavirus Preparedness and Response Supplemental Appropriations Act. This act
provided 8.3 billion dollars in emergency funding to treat and prevent COVID-19

• The 2nd was the Families First Coronavirus Response Act. The act provided nutrition assistance programs
and 1 billion dollars for emergency grants and interest free loans to support unemployment processing and
payment of unemployment insurance

• The 3rd was the Coronavirus Aid, Relief and Economic Stability (CARES) act which was the largest portion of
America’s relief effort

• The CARES act pointed to 3% of GDP stimulus and its price tag would be approximately equal to 10% of the
country’s economic output
FISCAL POLICIES ADOPTED - AMERICA (CONTD.)
• The CARES act provided 2.3 trillion dollars in stimulus money

• It had 6 main components namely Money for the Treasury, Facilitating Main Street Loans, Direct Stimulus
and Expanded Unemployment Benefits, state and local funding and tax code changes

• The CARES act also allocated 350 billion dollars to small businesses through the Paycheck Protection
Program(PPP)

• The CARES act impact divided American experts. The major question highlighted was the increase in ratio
of business debt to GDP which reached an all time high

• By June 3rd USA, had dedicated 14.3% of its 2019 GDP to address the crisis via fiscal impulses, payment
deferrals and liquidity measures

• Although the American package was twice that of the French it was less effective especially in curbing
unemployment due to poor design and implementation

• As happiness level among Americans dropped to an all time low Republicans and Democrats continued to
be divided on issues such as unemployment benefits, what type of aid to provide to companies and
whether direct stimulus to citizens should continue
FISCAL POLICIES ADOPTED - GERMANY
• Germany’s Ministry of Finance predicted that the country’s GDP would drop by 0.7-1.6% owing to the
pandemic

• It was predicted that 156 billion pounds would need to be borrowed to address the crisis

• To address the crisis Berlin temporarily transferred the largest part of the wage bill of companies which
were forced to cut or stop production to its government

• The state development bank of Germany offered long time subsidized credit to promote projects benefiting
the nation. The credit had no upper limit

• Germany’s federal cabinet added around 123 billion pounds to the country’s spending budget

• The welfare system was boosted by 7.7 billion pounds

• Tax Measures such as optional deferments to improve liquidity of business was also undertaken

• Germany also set up a Economic Stabilization Fund of 600 billion bounds to deal with the crisis

• By June of 2020 Germany had allocated a amount equivalent to 13% of its 2019 GDP to immediate fiscal
impulses, 7% to deferred payments and 27% to other liquidity measures.
FISCAL POLICIES ADOPTED - FRANCE
• France response to the crisis paralleled Germany

• The French government approved a fiscal support plan of 106 billion pounds on April 15,2020 to deal with
the economic impact

• The largest portion of the fiscal support(31 billion pounds) was dedicated to keep people employed

• The government reimbursed the companies for all salaries paid upto 4.5 times the minimum wage

• This policy was knows as the “chomage partiel” and by July 2020 more than 50% of all French companies
had applied for this policy

• French government also provided 210 billion pounds in tax and other payment deferrals and 342 billion
pounds in other liquidity and guarantee measures

• Like Germany , France also created programs to provide government backed loans in hassle free manner

• France spent an amount equating to 27.3% of its GDP on immediate fiscal impulses, payment deferrals
and other liquidity provisions
WORLD AFTER COVID

The unprecedented The initial period of As the economic

pandemic put the containment impact of lockdowns
world in complete eventually began taking a toll
shock as death toll transitioned into a countries slowly
rose, unemployment second period of started reopening
sky rocketed and recovery and their economies
people were confined policymakers
to their homes debated how to ease
restrictions while
maintaining social
distancing and safety
WORLD AFTER COVID

Germany allowed Wuhan in China In the US state

small stores to open eased restrictions on decisions remained
after a month long outward travel on uncoordinated.
lockdown. Spain April 8th after a 76 Whereas Republican
allowed employees day lockdown states were the first to
to return to work reopen businesses
whereas Norway Democratic states
prioritized reopening remained more
schools cautious
KEY LEARNINGS FOR BUSINESS MANAGERS
• Agility in decision making:- Need for agile decision-making, requiring business managers to swiftly
adapt to remote work, revamp supply chains, and reevaluate marketing strategies, underlining the
importance of real-time data and scenario planning for making well-informed and timely decisions.

• Diversification:- Diversification should go beyond financial investments and include spreading income
sources and customer bases, as the pandemic revealed the dangers of relying heavily on one product or
service, making it crucial for businesses to explore new markets, products and customer demographics
to mitigate the impact of economic downturns.

• Resilience and Contingency Planning:- Testing comprehensive contingency plans addressing supply
chains, workforce, finances, and crisis communication, alongside maintaining financial reserves and
credit lines to navigate economic shocks while proactively anticipating potential scenarios.

• Prioritizing Long-term Objectives over Immediate Rewards:-The COVID-19 global shutdown underscored
the importance of prioritizing long-term objectives like public health, healthcare infrastructure,
technology, supply chain diversification, and sustainability over immediate rewards.
"COVID-19 was more than a health crisis; it was an economic wake-up call, urging us to
rethink, reinvent, and rebuild for a more sustainable future."
THANKYOU FOR YOUR TIME. DO YOU
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