By Dr. Suman Kumar Regmi

The COVID-19 pandemic, which has overflooded nearly the whole world and carries critical results for countries’ populations and economies, is uncertain. This pandemic has expanded the uncertainty. The coronavirus is traced to the highest level of uncertainty in the economic context since the time of coronavirus data recording duration. The expected impact of COVID-19 on key macro variables such as GDP growth rate, employment, capital, SDGs; its impact on manufacturing production and the trade of goods and countries' possible industrial policy responses to address the pandemic impacts.

Preventing widely the pandemic effects, some measures have led to further downward predictions of economic variables in Nepal’s GDP growth rate. Based on the earlier months of 2024 the Nepalese economy was expected to experience its worst recession since the great depression, bearing the deep economic sudden severe following the Nepalese financial crisis about a decade ago. The Nepalese economy will be contracted by upto one percent.

Lockdown and other measures for controlling the pandemic would inevitably result in significant declines in GDP growth in almost all of the countries including Nepal in the world. Nepal has facilitated the measures to control the coronavirus and to adopt measures for the protection of the economy.

The previously predicted rise in unemployment in significant numbers with losses in labour income in the earlier range seems accurate to be a reality if not underestimated. The pandemic was expected to hit workers in low and middle-income countries particularly hard, where the share of those working in informal sectors, and who therefore have limited access to adequate health and social protection, is higher.

Result financial markets, together with tightened liquidity conditions in many countries, have led to sudden outflows of capital from developing countries. The net debt and equity outflows from the main emerging economies, which amounted US $ 59 billion since the COVID-19 crisis went global.

The COVID-19 crisis has brought back decades of progress in the fight against poverty, and that already high levels of inequality within and between countries will be further made worse. The crisis will therefore inevitably and adversely impact the implementation of the 2030 agenda for long-term development. The COVID-19 pandemic is expected to negatively influence almost all SDGs.  The current crisis will also severely affect the prospects for in industrialization of developing countries.  

COVID-19 is severely impacting manufacturing production in developing countries because: a. demand from high-income countries for manufacturing goods and raw materials is decreasing; b. value chains are being disrupted due to delays in the delivery of necessary components and supplies from more technologically advanced countries; c. other factors, including policies (e.g. restrictions of movements of goods and people), the inability of employees to reach the workplace or financial constraints, which affect the normal production process.

Regardless of the scenario whether optimistic or pessimistic, COVID-19 has a harmful socio-economic effect on Asia and South Asia. Losses related to the fall of global oil prices are estimated to be US $ 65 billion.  

Losses of up to US $ 19 billion are expected in one country in Asia. The crisis has also affected manufacturing firms. MNE persecuting of profits in developing countries have been revised down warding by 16 percent. This remission amounts to 18 percent in Asia.

The coronavirus first broke out in China. The country experienced a 13.5 percent reduction in industrial production in the first two months of 2020. Still not recovering the economy to the earlier level.

China is the world’s largest exporter and produces one-third of all the global manufacturing goods. China remains the epicentre of the crisis till America takes its position in a pandemic. Developing Asia has only been hit by 7.7 percent decrease in industrial production from the beginning of 2020 till  2021. China dramatically controled the coronavirus epidemic.

Countries less affected by coronavirus were India, NIEs and ASEAN from  March 2020 till now. Their industrial productivity continues to show a less positive growth rate.

It has been called that urge government to act fast and boldly has gained increasing support across the political spectrum. Economic policies after 2021 were felt distinct upon have resurfaced in a number of countries to prevent a complete economic and social breakdown owing to the containment strategies.

Whether the proposed economic measures for controlling the effects of COVID-19 could be transferred into long-lasting ones and whether they could have the way towards more structural reforms.

It has been called for solidarity and widespread cooperation as measures to build more equitable, inclusive and resilient societies that are better prepared to tackle pandemics, climate change and other challenges.

Most policy states in the context of the COVID-19, pandemic are different between short and long-term targets and medium-term to long-term goals. In the former case, the objective is to address the immediate health situation to protect income-generating opportunities and to safeguard the operation of the critical supply chain, e.g. necessities and health supplies. In the later cases, interventions to care for the economy fall out to emphasize measures to restore supply chains, recover demand and incentivise productive investment.

As the COVID-19 pandemic was rapidly spreading across the globe, most governments in developed and developing countries have followed some types of policy response to modify the immediate human and economic effects.

The government was monitoring macroeconomic policies in distinguishing between exchange rate and balance of payment measures, monetary and micro-financial measures and financial measures, has identified major difficulties across countries in terms of the breadth and scope of economic activities beyond those related to how strict for far-reaching the adopted social distancing and block down measures are if any.

The exchange rate adjustment and bop measures can help policymakers in emerging and developing economies balance the difficult challenge of addressing capital flow reversals and commodity stocks.

Every nation has sketched a host of challenges for the industry in light of the ongoing crisis, including supply chains and the workforce’s global mobility. It identifies policy measures such as extending lines of credit, reducing infrastructure costs, providing short-term funding, lessening the tax burden, and providing supply chain support that could assist manufacturers in responding to and anticipating necessary adjustments.

In addition to all of the above-mentioned measures to cope with the immediate economic downturn associated with the COVID-19 pandemic, governments have also started to extend support to manufacturing companies. The government has initiated stimulus packages and announced so far a well-come step to reduce poverty and the immediate economic damage caused by the pandemic, assisting severely hit businesses and promoting job retention.