COVID-19 Impact on Economy

The COVID-19 pandemic is the infectious disease caused by the most recently discovered coronavirus. This new virus and disease were unknown before the outbreak began in such places Wuhan and China in December 2019.  This Virus is now a pandemic affecting every single country globally.

The COVID-19 pandemic has affected all aspects of life both here in Asia and around the world. The rapid spread of Coronavirus (COVID-19) has dramatic impacts on financial markets, gold and oil and many more all over the world

FINANCIAL MARKETS

Covid-19 has created an exceptional level of risk, causing investors to suffer significant losses in a very short period. This paper aims to lead the universal patterns of country-specific risks and systemic risks in the global financial markets. It also analyses the potential outcome of policy interventions, such as the US’ decision to execute a zero-percent (0%) interest rate and unconstrained Quantitative Easing (QE), and to what point these policies may introduce further uncertainties into global financial markets. The stock market declined over 30% by March; implied volatilities of equities and oil have spiked to crisis levels, and credit spreads on non-investment grade debt have widened sharply as investors reduce risks. This heightened confusion in global financial markets is occurring even though the extensive and comprehensive financial reforms agreed by G20 financial authorities in the post-crisis era.

OIL PRICE

Global energy market demand such as for oil, natural gas, and coal is declining as the impacts of COVID-19 pandemic spread around the world. This decline in oil demand has been particularly significant as oil is mainly used in the transportation sector and business closure. Though the Covid-19 pandemic has affected everything around the world curtailing economic activity, there is hope that the consumption of various oil products will rise again. Global oil demand has contracted for the first time since the global recession of 2009. Meanwhile, lower get by costs and technological advances have tilted the balance of global crude markets to “Oversupply”. Crude oil imports have fallen by 13.4% which will cause the economy to grow at a slower pace. The recent collapse in oil prices in the global market was caused by a combination of supply and demand issues as well as uncertainty about the future.

GOLD PRICE

The financial problem caused by Coronavirus leading to failing currencies worldwide pushed gold to hit a record high, The price of gold in the international market surged to $1,757 per ounce (31.10 grams), with an upward trend seen repeatedly for the past few days. Through mid-February, gold continued in its slow-burn bull market, driven by two main factors. The first was safe-haven buying resulting from global uncertainty, tied to the shutdown in China up to that point, and also the ongoing U.S.- China trade war and euro-zone weakness. The second was low to harmful yields on high-quality government bonds.  When funds have to pay for lending to the government.  The pleasant appearance of gold increases, especially when the cost to hold is at a historical low.

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