Rolling Recessions are the Likely Economic Impact of New Coronavirus And COVID-19

Bill Conerly Senior Contributor

The new coronavirus, which causes the new disease COVID-19, is the major uncertainty in the global economy, with the potential to trigger a worldwide recession. The path of the disease and its economic consequences are highly uncertain. Most likely, the world will see rolling recessions as the disease spreads to different areas, with economic recovery as the local epidemics die down.

A coronavirus forecast comes not because the future is known with high certainty, but because businesses are making decisions every day that depend on the economic outlook. The rolling recession prediction is the most likely as of today (March 10, 2020) but may change as new information emerges.

Source: https://www.forbes.com/sites/billconerly/2020/03/10/rolling-recessions-are-the-likely-economic-impact-of-new-coronavirus-and-covid-19/#3759e0c13209

Questions:

a) Based on the article above, COVID-19 is a major uncertainty in the global economy. Explain why uncertainty in the economy is destructive for businesses. (10 marks)

b) Businesses are making decisions every day based on the economic outlook. Uncertainty in the economy can hamper their decision making. Suggest two (2) ways how businesses can reduce the risk of uncertainty in decision making. (5 marks)

c) Discuss, with appropriate examples, two (2) types of policy that the government can use to solve the recession. (10 marks)

d) Using a diagram, explain the impact on Chinese Yuan as China's exports plummeted due to COVID-19 epidemic. Discuss the implication of this situation on the businesses of Malaysian importers of Chinese products. (10 marks)

e) Based on the current global economic situation due to COVID-19 pandemic, state your opinion regarding Malaysia's ability to weather the economic repercussions of the pandemic. Substantiate your opinion using relevant economic theories and concepts. (10 marks)