While the Indian economy was already struggling with a slower growth rate, the coronavirus pandemic is making things even worse. Market pundits have made the announcement and the indicators suggest the same – we’re facing global economic recession. And this recession is going to be bad.
How long the coronavirus outbreak lasts is uncertain. However, when it does stabilizes and leaves, it will leave with clutters of economic ruins. It is already causing the supply-side disruptions. Factories are getting closed and employees are being laid-off. This will cascade to lower consumer spending, which then will also lead to negatively affect the demand-side of the economy. Collectively, this will cause a general slowdown in the economy, which will continue to worsen unless intervened by the government – at the right time – with fiscal stimulus.
How Indian Zinc Industry Will Be Impacted?
Every industry is expected to bear the brunt of this recession, including the Indian zinc industry. Zinc is employed as a raw material in a wide range of products, from cosmetics, batteries and electrical equipment to plastics, soaps, and inks. With factories shutting down owing to the threat of coronavirus pandemic, their supply will halt, resulting in reduced demand for zinc. Further, with consumer spending expected to go down due to several economic factors (including unemployment and reduced purchase power), even when the impact of coronavirus stabilizes in the coming months, the demand for many household products will take a hit. So, when the factories do open, they would be unlikely to supply more so to avoid inventory surplus. This will keep the demand for zinc consistently low.
Of course, as mentioned, this isn’t just about the zinc industry in India, but also every other segment. Economic slowdown – triggered by both demand and supply-side factors – is bad for everyone. It’s just as difficult time for any business owner as it is for a zinc manufacturer in India.
What’s the way out?
The Solution
The foremost priority should be effectively containing coronavirus threat. India, compared to other countries, has done a fair job at it. The efforts must continue to ensure everyone’s safety. Unless the communities feel safe, there couldn’t be any economic upside. Following, the government must work to stimulate the economy through fiscal policies to increase consumer spending. When the consumers are spending more, the demand side disruptions will smoothen. This will inevitably follow to fix the chaos on the supply side of the economy. The economy will get back on track – and so will the Indian zinc industry, along with other segments.
Admittedly, it’s a long way ahead and a lot needs to go right for things to turn up per desire. Every eye is on the countrymen and women – how we fight (and end) coronavirus. At the same time, the eyes are also on the government – how it prepares itself to fight the global recession.