How the Economies of Brazil and India Have Been Influenced by Covid-19?
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In Brazil and India, two of the biggest developing nations in the world, the COVID-19 pandemic has had a profound and multifaceted economic impact. The health, economic, and social effects of the pandemic have been mitigated in both countries, but there have been significant obstacles to overcome.
The COVID-19's devastating economic effects have been felt in Brazil. The nation experienced one of the worst economic downturns in its history, with a record contraction of 5 point 8 percent in 2020, leading to millions of job losses, income reductions, and increased poverty and inequality. With over 450,000 deaths and more than 16 million cases as of May 2021, the health system has also been severely taxed by the rise in infections and hospitalizations. Brazilian exports, particularly those of commodities like oil, soybeans, and iron ore, have seen a decline in demand and price on the world market. Brazil has demonstrated some signs of recovery and resiliency in 2021 despite these difficulties. In order to support income and consumption, the government extended some social protection programs until August 2021. As a result, the economy expanded by 1.2 percent in the first quarter of 2021. The emergence of new variants and low vaccination rates are just two of the many COVID-19-related uncertainties and risks that Brazil is still dealing with.
Similar to other countries, India has also experienced a serious and extensive economic impact from COVID-19. The country's GDP growth rate fell from 61% in 2019 to 4% in 2020 and further decreased by 73% in 2021, causing disruptions in domestic demand and exports, particularly in industries like tourism, hospitality, aviation, manufacturing, and trade. With over 450,000 fatalities and more than 33 million cases as of November 2021, COVID-19 has also had a significant human toll in India. This has put a strain on the healthcare system and led to shortages of vaccines, medications, and oxygen. With the deficit-to-GDP ratio rising from 4 point 6 percent in 2019 to 9 point 5 percent in 2020, the government's increased public spending to lessen the social and economic effects of COVID-19 has also raised questions about fiscal sustainability and credibility. India's external sector has been impacted by the decline in global demand and prices for its exports, particularly oil products, gems and jewelry, textiles, and leather goods. Despite these difficulties, India has demonstrated some signs of recovery and resiliency in 2021, with the economy expanding by 20.1% in the second quarter and the government extending social protection measures until November 2021 to support consumption and income.
However, there are still a lot of unknowns and dangers associated with COVID-19 for India, including the emergence of new variants, low vaccination rates in rural areas, and the political climate as the nation gears up for general elections in early 2024.
In conclusion, COVID-19 has had a significant and wide-ranging economic impact on Brazil and India, affecting a number of different industries and aspects of their economies. Despite some signs of resiliency and recovery in both nations, there are still a lot of risks and uncertainties connected to the pandemic. For Brazil and India to improve their health systems, social protection programs, and economic resilience and ensure a more sustainable and inclusive recovery from the pandemic, they can benefit from the lessons learned and best practices identified by international organizations and other nations.
Moreover, the pandemic has had an effect on India's export-oriented sector. Certain industries have been severely impacted by disruptions in global supply chains, a decline in global demand for its exports, and declining export prices. As an illustration, the pandemic has had a severe impact on India's textile and apparel industry as a result of decreased demand from important markets like the US and the EU. This sector accounts for a sizeable portion of India's exports. Similarly, the pandemic-related travel restrictions have had a significant negative impact on the aviation industry, resulting in a sharp decline in passenger traffic and revenue.
Despite the difficulties, India has proven to be resilient and creative in addressing the economic effects of the pandemic. The government has unveiled a number of initiatives to boost the economy, including a $266 billion relief package to aid individuals and businesses hit by the pandemic. For the purpose of fostering job creation and economic growth, the government has also implemented a number of structural reforms, including labor market reforms.
In conclusion, COVID-19 had a significant and wide-ranging economic impact on India, with serious ramifications for its prospects for future growth and development. Although the nation has shown signs of recovery and resiliency, it still faces formidable obstacles, such as controlling the virus's spread and immunizing a sizable population, managing pressures from the external and fiscal sectors, and addressing structural growth barriers. For India's economy to recover and its prospects for long-term development to look promising, the government's response to these issues and its capacity to deal with them will be crucial.
Author: Pooyan Ghamari, Swiss Economist and Visionary in Global Markets and Finances
