2.

Worst Affected Sectors of Global Economy:

The damage caused by COVID-19 is not confined to only select pockets of businesses but it
is a widespread malady that is expected to keep the economy sick for a longer time. While the
magnitude of the impact may vary from sector to sector, there are some sectors that have
suffered the most.

1. Aviation: The COVID-19 pandemic has had a significant impact on aviation industry due

to the resulting travel restrictions as well as slump in demand among travellers. Significant
reductions in passenger numbers have resulted in planes flying empty between airports and
the cancellation of flights. Industry experts highlight that the aviation sector globally incurs
higher fixed costs and operates at very thin margins due to high competition from low-cost
carriers (LCC). Due to the severity of travel restrictions and the expected global recession,
the International Air Transport Association (IATA) estimates that industry passenger
revenues could plummet by US$252 billion, 44 per cent below the 2019 figure. It has been
reported the aviation sector in India may lose as much as Rs 85,000 crores along with 29 lakh
jobs.

2. Travel and tourism: As a result of the pandemic, many countries and regions have
imposed quarantines, entry bans, or other restrictions for citizens of or recent travellers to the
most affected areas. The travel and tourism sector – which prior to the COVID-19 outbreak,
was expected to make up 11.5 per cent of global Gross Domestic Product (GDP) – has been
particularly hard hit. The European Union’s tourism industry is estimated to be losing around
€1 billion in revenue per month as a result of the outbreak. A KMPG report from last month
had already predicted the Indian tourism and hospitality sector to lose more than over 3.8
crore jobs.

3. Automobile: The automotive industry is also struggling with an abrupt and widespread
stoppage in economic activity, as workers are told to stay at home; supply chains grind to a
halt and factories. The automobile sector in India has been forced to stop key manufacturing
activity and has led to a sharp drop in production and sales. For a sector, which had been
trying to overcome myriad challenges already, the outbreak of COVID-19 is no less than a
curse. In FY20, automobile volumes declined on account of weak economic scenario, price
increase due to BSVI transition, inventory correction by OEM’s and Covid-19 impact in
March 2020. Considering that the Indian auto industry relies on China for 27% of the imports
in 2020 have been a further worst year as the regions are dealing with the virus at different
time periods. 

4. Real Estate Sector: This industry suffers from the direct implications of the
virus. The majority of the job losses due to the pandemic are in the construction
sector. The real estate sector in India will suffer immensely but indirectly due to the
lockdown. This is because with people losing jobs and sources of income. Investment in the
real estate sector is further doubted. As a result, housing sales are expected to fall by 25-
35%. Due to the lockdown and fewer buyers will show interest in the retail spaces.

5. Financial markets: Economic turmoil associated with the coronavirus pandemic has
wide-ranging and severe impacts upon financial markets, including stock, bond and
commodity (including crude oil and gold) markets. Major events included the Russia-Saudi
Arabia oil price war that resulted in a collapse of crude oil prices and a stock market crash in
March 2020. The United Nations Development Programme expects a US$220 billion
reduction in revenue in developing countries, and expects COVID-19's economic impact to
last for months or even years.

6. Miscellaneous: The other adversely affected sectors include-

a. Apparels & Textiles will get hit adversely due to disruption in labour supply, raw material
unavailability, working capital constraints and restricted demand due to limited movement of
people and purchasing ability. The textile industry in India depends on China for both
imports and exports. India exports 20 – 25 million Kg’s a month to China. These exports
have been affected due to a lack of demand from China. Imports from China include $460
million worth synthetic yarn and $360 million worth synthetic fibers.

In addition, India depends on China for buttons, zippers, hangers, and needles which make
up $140 million. The textile industry faces challenges not only from China but also from
Europe. This is because of the countries affected by the pandemic like Italy and Spain have
asked not to export to them.

b. Shipping and Non-Food Retail – Non food retail chains and global shipping businesses
will find this 12 month period very challenging.

The lay off’s show that the pandemic and the great lockdown has forced industries into a
corner. The revival of these industries will require an individual industry-wise focus to boost
the economy.