Understanding the Economic Shock of Coronavirus

This article discusses the economic shock caused by the Coronavirus pandemic and the policies implemented by the Canadian government to mitigate its impact. It explores the implications and research on how the outbreak affects nations globally. The article also analyzes the impacts of these policies on businesses and the economy.

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Table of Contents
Article: Understanding the Economic Shock of Coronavirus.........................................................3
Introduction.....................................................................................................................................3
Policies that brings changes in businesses:.....................................................................................3
Analysing Impacts:..........................................................................................................................4

Article: Understanding the Economic Shock of Coronavirus
Introduction
For determining the recent changes in economic policies and interventions of Canadian
Government behind it, an article “Understanding the Economic Shock of Coronavirus” given
by Philipp Carlsson-Szelezak, Martin Reeves and Paul Swartz (2020) is chosen. The reason
behind the same, is implications and in-depth research done in this article, about how outbreak
of Coronavirus affects entire nations at global level, including actions taken by policy makers
and government to overcome from the same.
Predicting the path to prevent from pandemic attack of Coronavirus (Covid-19) and
balance economic conditions, become nearly not possible for every nation. But it can speculate if
correct interventions can be taken for providing relief to public and businesses, whose
contributions is necessary for the same. In context with Canadian Government, as this virus
continues its march at global level, but public health measures like social distancing, sanitising
each and every place at regular intervals, stay at home and more, helps to physically disrupt this
contagion. But multiple dimensions of this crisis leads to higher the economist costs. Along with
this, path of shock regarding global recession under this uncharted territory actively put
pressures to make effective policies for supporting organisations to run business successfully
(About impact of economic recession, 2020). Because interventions of other nations like
restrictions on trade activities across the territorial boundary, leads to reduce profitability and
revenue of companies, that results in closing various stores and firing of various employees from
workplace etc. It has been analysed from this article that around 3.28 million of people are at
initial level of unemployment due to economic crisis in U.S., which has created the cripple
supply side of economy. In this regard, if such kind of liquidity problems will continue persists
then it leads to raise highly the capital problems for entire organisations of Canada.
Policies that brings changes in businesses:
There are a range of policies which became cause of economic recession in Canada. The
key policies which affected to economy of nation are related to innovating out of shock which
became reason of this recession (About policies that affected, 2019). As well as higher rate of
interest was also another reason due to which recession in economy happened. This is so because
of increased rate of return this becomes difficult to companies to get financial assistance and as a

result economic growth gets slowdown that becomes reason of poor performance of companies.
So these are some major policies which reduced growth of Canadian economy.
Apart from it, in recent time period due to Corona virus companies failed to run their
operations in an effective manner that resulted as declined graph of growth of economy. In this
type of typical condition government of Canada did not take any suitable actions in order to
improve the performance. In addition to these policies, there are some other causes which were
main source of recession in economy of Canada (About policies that affected, 2019). Under these
causes the main reason was of lack of customers’ confidence in regards to purchasing power.
Due to COVID 19 pandemic, this was difficult for companies to attract more number of
customers as people were with less income as well as lock-down resulted in closure of all
business activities. Along with, psychological aspects were also become cause of recession such
as if companies expect that economy will boost and they make invest of huge funds than this
may lead to lose for companies due to consideration of higher risk. Though, higher risk is
proportionate of more return but not in each aspect. Companies have to make investment in
accordance of proper analysis of each and every aspect. Otherwise situation can be unfavourable
like in Canada due to wrong adoption of policies.

Analysing Impacts:
There are many useful or interesting ideas to the evolving policy environment. Among
these are bridge-loans which give families and businesses zero-interest loans for duration of the
recession and a gracious repayment time-frame; a total ban on mortgages repay for housing and
industrial borrowers; or the utilize of financial institutions to weigh on financial institutions to

offer financing and redesign existing loans conditions (About impact of economic recession,
2020). Such policy advancement might have a constructive impact on the supply edge of
economies in loosening the effect of virus. Yet it requires effective and responsive execution as
well. Government's policies are more focused towards supporting economy for short period
while ignoring adverse impacts of such policies on economy. Major impact of all the discussed
policies will be on banks and financial institutions especially private banks and small financial
institutions which have limited resources. Aggregate mortgage percentage is already high so
there are huge chances that may banks will go into liquidation.
Impact of aforementioned policies will be long-term but for handling the current situation
these steps are necessary. The supply side of an economy is historically affected by financial
disasters. Such a problem has a long background, and politicians have learnt a lot about coping
with it. Yet coronavirus spreads leverage and resource issues to an unparalleled size of real
economy. As if the dual risk of disruptions from financial and actual liquidity would not be
enough, these are also interconnected, increasing the stakes. From a policy viewpoint,
people may be aware that the remedies, bailouts including bank debt financing are politically
contentious. Asset investment will be taking a big hit in the event of a financial downturn,
causing a prolonged recession of labour and efficiency disruption as well. Thus overall analysis
shows that policy impact will be uneven, sometime delayed as well as there will be chances of
missteps.

REFERENCES
Books and journal:
About impact of economic recession, 2020. [Online] available through:<
https://hbr.org/2020/03/understanding-the-economic-shock-of-coronavirus>
About policies that affected, 2019. [Online] available through:<
https://www.hindustantimes.com/world-news/britain-encourages-at-risk-groups-to-sign-
up-for-covid-19-vaccine-trials/story-Lp6blu34OrMPj6pPSyyvRJ.html>

Refere