By Ahmet Abdulaziz….
Though hundreds of thousands of people have lost their lives in wars, genocides, terrorism and hunger, there has not been anything with such far-reaching effects as the Coronavirus (COVID-19) seems to be capable of. Even the Second World War did not give the whole of the planet so much fear as the world is experiencing nowadays.
It is not just the human lives that are at stake now, the multi-dimensional effects of the present pandemic have now started affecting everything on the earth. The whole economical and financial systems of the world are now at stake. The foreseen bankruptcy is obviously not going to be limited to only the small shopkeepers and businessmen. It is obviously going to climb up to unprecedented levels.
As the whole world has almost stopped all sorts of activities, and human beings are mostly locked down inside their houses, the economical wheel of the world has slowed down. The recession is just around the corner. People have already started feeling the pinch, yet I believe that it is just the tip of the iceberg that we are now seeing.
A number of countries have already started showing financial difficulties. They simply cannot take care of their people, who are no more participating in the economic activities to run the country. The world bank has announced financial grants and packages to a number of countries, but most probably that would not be sufficient for most. But this is just one side of the story. The important question is whether the world bank would be financially able to go on providing aid to a number of countries for a long period of time?
Right now nobody can forecast the end date of the COVID-19 pandemic. With the future looking bleak right now, the financial giants of the world are trying to reconsider their future plans. Honestly speaking I believe that all large financial institutions have stopped long term investments. They must have concentrated rather more on very short term investment plans. If they do not do this right now, the future is expected to be much more risky and difficult for them.
The latest slump in the international oil market can be taken as one serious indication of what may happen in the future. The crude oil price has gone down to an unprecedented level. Right now there is too much crude oil in the hands of the producers and sellers, with no buyers around. The reason is very simple. The consumption of oil has gone down too fast, due to the closure of production units which are temporarily closed. The consumption of petrol has gone down internationally as the number of vehicles on roads world over has gone down excessively.
This is what the economists had never thought about. Petrol usually plays an important role in the determination of selling prices of each and every commodity. A reduction in petrol prices is obviously going to disturb the pricing mechanism the world over.
The COVID-19 pandemic has given rise to world economic uncertainty. For sure, the ongoing petrol pricing crisis would affect the performance and profitability of world giants in this particular field. The refineries would suffer losses, and their financing banks would ultimately find themselves in a drastic financial crisis.
If the banking sector comes out to meet this challenge, there are chances that the world economic order would survive with less damage. On the contrary, if the world money markets, stock exchanges, financiers, fail to cope with the demand of the time, the whole world economy may fall down apart, like a house of cards.
However, as the law of nature works, the time clock will continue ticking. With all minor and major damages everywhere, including loss of human lives, the Coronavirus crisis will end one day. What will be the overall condition of the world then? I think nobody can guess right now.
Maybe I am too pessimistic? Am I?