Coronavirus Ravages Global Financial Markets: Economic Downturn Looms - Essay Sample

Introduction

The world continues to experience a decline in the financial markets as the coronavirus continues to develop intensely over time. The global stock market appears to suffer pricing in the long term economic downturn over the virus outbreak. This scary disease has not affected the major financial hubs in the world, including China, the Asian continent and Europe and is fastly spreading to other parts of the world.

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The most significant scare of the fast-spreading virus remains the financial markets since the effect one economy equally affects others either directly or indirectly (Johnson, 2020). The prospects of economic slow down experienced by the investors across the world force the transfer of money to safer havens. This change of activities contributes to the reduction of the yields on United States government bonds to low records and risks of recessions. There exist more worrying situations when the yields remain inverted. The reversal of the yields pattern suggests shorter-term debts compared to ten years period.

The spreading of the virus could also result in the growth down of the chines economy by a significant margin considering that the anticipated growth for a sustainable rate needs to remain to six per cent of more to meet its economic and political stipulations (Johnson, 2020). The unexpected spread of the coronavirus to Europe and the middle east has contributed to the closure of Italy's economic hub, and then spread into Spain worsens the commercial capability of European nations and the rest parts of the world that depends on these regions for financial transactions. The process of quarantining people and an additional extension of the lunar year in the chines nation continues to contribute to the stagnant economic growth in the country. These quarantines have prevented workers from working to work, and this concept helps to less productivity in the economy.

There also exist other multi-billion industries and corporations located in the Chinese market that continue suffering the threat of coronavirus. The quarantine process prevents the movement of planes in and out of the country. The coordination of foreign companies keep turning difficult, and several states will register significant losses over the period the scare will continue.

The scare of coronavirus on the investors has witnessed a tremendous amount of cash poured into the fixed income since the outbreak of the diseases that continues to terrorise the world slow down the global growth rates. The exchange-traded funds and fixed mutual income took in $23.6 billion that represent the most massive intake witnessed since 2001 when the sars virus affected the financial arena greatly. The emergence of the virus could reduce by at least 2% of the global domestic product growth (Smith & Henderson, 2020). These effects will lower spending in china from the decline of tourists spending and lower imports due to fearing the contact between the Chinese and the outside world.

The effect of coronavirus will affect the financial capabilities of the developing economies that will require channelling of more funds into fighting the disease at the expense of other uses (Smith & Henderson, 2020). The spendings will result in accruing of more debt from developed countries since there exist the need to import professionals to deal with the disease and application of modern pieces of equipment necessary to tame the spread of the virus.

Conclusion

In conclusion, the spread of coronavirus across the world presents an adverse danger to various economies and the lives of people. The virus affects all sectors with the transport industry feeling the most significant impact of the quarantine processes. The government and other stakeholders need to finder a faster solution to the spread of the virus before it brings the world economy into a recession.

References

Johnson, K. (2020). World Stock Markets Begin Betting on a Coronavirus Slowdown. Foreign Policy. https://foreignpolicy.com/2020/02/25/coronavirus-global-stock-markets-economic-downturn.

Smith, C., & Henderson, R. (2020). Fixed-income fund flows rise as investors fear coronavirus impact. Ft.com. https://www.ft.com/content/491cbdbe-4ec0-11ea-95a0-43d18ec715f5.