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2020 | Book

Coronavirus Outbreak and the Great Lockdown

Impact on Oil Prices and Major Stock Markets Across the Globe

Authors: Prof. Dr. Bhaskar Bagchi, Dr. Susmita Chatterjee, Raktim Ghosh, Prof. Dr. Dhrubaranjan Dandapat

Publisher: Springer Singapore

Book Series : SpringerBriefs in Economics


About this book

This book captures the dynamic relationship between COVID-19 pandemic, crude oil prices and major stock indices as well as the crude oil prices and stock market volatility that have been caused due to outbreak of this pandemic. The pandemic has changed the world melodramatically and major world markets collapsed in the beginning, affecting major industries in an unprecedented way. The book will be useful to the researcher in the field of finance and economics, and policy makers both at government and private level, keeping in view the present state of economy throughout the world.

Table of Contents

1. Introduction
“Coronavirus is creating a dangerous time for markets, panic is just starting. This disease is contagious even before it shows obvious symptoms. So, it is going to be harder to quarantine people in this epidemic. That is the narrative, and we have not gotten very far into it yet. So, the potential for market disruption because of a scary narrative is quite high”.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
2. Pandemics and Economic Crisis
The spread of the COVID-19 is causing worldwide downturn in economic activity and creating crisis in spheres of life. World has witnessed several crisis situations due to outbreak of epidemic, world wars and financial insurgency. The coronavirus outbreak has already had massive negative implications for the global economies with supply chain disruptions and disintegration across the globe. The positivity of globalization, enjoyed by all the nations, is now disappearing with restrain in movements of both people and product. The consumption of goods and services including energy is plunging throughout the globe.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
3. Impact of COVID-19 on Global Economy
As the whole domain of our world struggles to encounter the COVID-19 pandemic, its effect on the global economy is increasing—with the OECD cautioning, the present pandemic poses the biggest threat to the international economy after great recession in 2008–2009. UNCTAD, the United Nation’s Trade and Development Agency, already cautioned of a depression of global growth rate to below 2% in 2020, which may eventually rub out USD 1 trillion off the total worth of the global economy (https://​news.​un.​org/​en/​story/​2020/​03/​1059011). Richard Kozul–Wright, Director, Division on Globalization and Development Strategies, UNCTAD, commented—“We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of USD 1 trillion, compared with what people were forecasting back in September 2019”. On account of rising uncertainty regarding production and prices of crude oil, and by the way, the major stock indices collapsed above apprehensions regarding supply-chain disruptions that begun from China, Mr. Kozul–Wright also informed that some countries may likely to be left unharmed by the COVID-19 outbreak (https://​news.​un.​org/​en/​story/​2020/​03/​1059011) (Exhibit 3.1).
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
4. Plummeting Oil Prices and Oil Demand
International demand of crude oil is likely to drop in the current year due to immediate shock that has been created because of COVID-19 outbreak around the globe covering 183 countries. According to the International Energy Agency’s (IEA) recent forecast on oil market, the present COVID-19 pandemic has restricted travel and other financial activities throughout the world. The economic state of condition is very much volatile, thereby generating an unusual degree of insecurity amongst the investors, as because the total after effect of this pandemic is still unknown. Demand for crude oil in IEA’s central base case has been dropped for the current year for the first time since 2009, mainly due to huge fall in consumption of oil in China, the second largest importer of crude oil (https://​www.​iea.​org/​news/​global-oil-demand-to-decline-in-2020-as-coronavirus-weighs-heavily-on-markets).
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
5. Major Stock Markets of the World: An Overview
This chapter provides a brief summary on the major stock markets across the globe which is considered to be the mirror of the global economy.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
6. Literature Review
In recent times, Chen et al. (2020) investigate the effect of the outbreak of the COVID-19 pandemic upon the daily consumption by the common people using day-to-day transaction data in 214 cities in China. The results reveal that the daily spending on services and goods have been affected harshly. Again, Al-Awadhi et al. (2020) study the impact of COVID-19 on stock market returns of Chinese companies. The authors have applied correlation analysis and panel data regression model, and the study results show that the blowout of the pandemic has considerably affect the returns of the Chinese companies in a negative way in all the sectors. But, as a whole, due to scarcity of literature regarding the impact of COVID-19 outbreak on economy, crude oil prices and stock markets, we have decided to examine research works that analysed the impact of earlier epidemics on the economy of different countries. Thus, several studies relating to the effect of epidemics (like, Spanish flu, avian influenza, HIV/AIDS, etc.) on economy have been surveyed, the summary of which are given here under.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
7. Objectives and Methodology of the Study
In the wake of the COVID-19 pandemic that has created a shockwave throughout the world, in terms of both death and insurmountable economic loss, the present study aims to examine the impact of the outbreak of the disease on the world economy in general and more specifically.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
8. Analysis and Findings
Tables 8.1 and 8.2 show the descriptive statistics of all the variables. Probability value suggests that all the variables are normal except Shanghai composite and NASDAQ 100 due to p value more than 0.05. The variables have 169 samples during the study period. During the study period, prices of crude oil rose to 2.9052 and came down to 1.0004 with a mean price of 1.6285. The Shanghai composite rose to 3.4935 and came down to 3.4249 with a mean point of 3.4652. The KOSPI rose to 3.3554 and came down to 3.1636 with a mean point of 3.308. The BSE SENSEX rose to 4.6227 and came down to 4.4146 with a mean point of 4.5677. The FTSE 100 rose to 3.885 and came down to 3.6984 with a mean point of 3.8299. The NASDAQ 100 rose to 3.9876 and came down to 3.8455 with a mean point of 3.9296. The MOEX rose to 3.9207 and came down to 3.3248 with a mean point of 3.4965. BOVESPA rose to 5.0774 and came down to 4.8032 with a mean point of 4.9932. FTSE MIB rose to 4.4061 and came down to 4.173 with a mean point of 4.3221. NIKKEI 225 rose to 4.3817 and came down to 4.2188 with a mean point of 4.3367. CAC 40 rose to 8.7178 and came down to 8.2308 with a mean point of 8.5784. DAX 30 rose to 9.5316 and came down to 9.0409 with a mean point of 9.3966. S&P TSX rose to 9.795 and came down to 9.3262 with a mean point of 9.6761. FTSE/JSE rose to 8.1711 and came down to 7.7122 with a mean point of 8.0667. The variables like crude oil KOSPI and MOEX possess “fat tails”, and all the select variables are normally distributed.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
9. Conclusion
The outbreak of COVID-19 pandemic throughout the world is nonetheless a human tragedy unfolding across the world, since the outbreak of Spanish flu in 1918–19. Due to significant uncertainty about the economic outlook and the associated downside risks, it is quite difficult to quantify the economic impact, and an unforeseen upsurge in vagueness can put both economic growth and financial stability at risk. The economists at International Monetary Fund (IMF) suggests that besides targeted economic policies and fiscal measures, the appropriate monetary and financial stability policies of the countries are very much necessary in order to strengthen the global economy.
Bhaskar Bagchi, Susmita Chatterjee, Raktim Ghosh, Dhrubaranjan Dandapat
Coronavirus Outbreak and the Great Lockdown
Prof. Dr. Bhaskar Bagchi
Dr. Susmita Chatterjee
Raktim Ghosh
Prof. Dr. Dhrubaranjan Dandapat
Copyright Year
Springer Singapore
Electronic ISBN
Print ISBN