A report by the leading consulting agency, KPMG has said that the economies in many parts of the world including India will go through various fundamental changes after the COVID-19 crisis is over.
The crisis is projected to give a boost to the digital economy and the pharma sector.
E-commence might experience blurry growth in the short run but will experience sustained growth in the long run. With many institutions and organisations shut during the lockdown, this sector is experiencing growth as many E-commerce behemoths like Amazon and Flipkart operate under providing essential services to the customers. However, there is growing pressure on the supply chain for deliveries of the products during and post the lockdown.
Nevertheless, E-commerce has great potential as it can deploy more delivery executives to avoid panic buying during the shutdown and also helps in restricting the movement of people on the streets.
Along with this sector, there will be positive growth in the gig economy. For example, Uber partnered with National Health Authority to provide transport services to COVID-19 healthcare workers.
As per the KPMG report, sectors which will be impacted by this lockdown are:
The tourism and hospitality industry will be hard hit as people cancel their travel plans. Hotels are seeing an alarming drop in the new bookings and the tourism sector which contributes to about 10% of the GDP, will face challenges in the short and long term. This crisis is seen to impact this sector worse than the financial crisis in 2008 as speculations over its survival has already started.
The World Travel and Tourism Council has estimated a loss of USD 22 billion while resulting in about 50 million people losing their jobs.
Normally, low oil prices will be considered to be a positive sign for a mass importer like India. However, oil markets that are already facing a challenge due to price wars will further deteriorate amid the crisis.
The civil aviation industry is expected to lose over 3 billion dollars due to this slowdown. Even as borders remain shut, travel will remain shut internationally and demand for domestic travel will decline in the short and the long run.
The logistics sector, however, will see an improvement and so will the food processing industries that will be established to improve value chains.
The automobile sector will suffer to a great extent due to its weak ability to adapt to online spaces. With lower demands, the sector will find it tough to cope with the struggles of manufacturing and production.
The Pharma sector is one that will see enhanced demand both nationally and internationally. There is potential for further export growth if supported by capital infusion. This sector should also encourage research and development amid the crisis.
Also, cash will continue to rule as business entities will continue to maintain ‘cash in hand’ to meet emergencies and digital spaces will prosper as work from home becomes the new norm.
While India’s economic growth appears to be hampered, it can be tackled with stimulus infusion and technological interventions. However, there will be a fundamental shift in the ways the economy will shape up as the virus continues to cause destruction worldwide.