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Editorial: Faith Falls Fast

Port Wings, 16 September 2020:

The Covid-19 crisis, and the political, economic and social disruptions it has caused, is fundamentally changing the traditional context for decision-making. The inconsistencies, inadequacies and contradictions of multiple systems –from health and financial to energy and education – are more exposed than ever amidst a global context of concern for lives, livelihoods and the planet.

Leaders find themselves at a historic crossroads, managing short-term pressures against medium- and long-term uncertainties.

The official figures released by the National Statistical Office (NSO) showed that the Indian economy had contracted by 23.9 per cent in Q1 of 2020.

These numbers are the first estimates based on data obtained from large firms and are bound to worsen once more accurate and representative data becomes available. However, since India was under a stringent lockdown for practically the entirety of Q1 (April-June) and the economy has gradually opened up after that, the following quarters should marginally ease out the pain.

As per the latest statistics from the Centre for Monitoring Indian Economy (CMIE), about 21 million salaried jobs have been lost between April and August. The unemployment in the month of August across India was 8.35 per cent as per their survey up from 7.4 per cent in the previous month. Urban unemployment was almost in double digits. So, the economic crisis still seems to be a developing phenomenon.

The agriculture sector has been the saving grace for people who have lost jobs in the last few months. The sector has added 14 million jobs in August alone according to the CMIE data. The agriculture sector was also the only part of the economy that has presented positive growth in the Q1 estimates put out by NSO. At constant prices, the agriculture sector grew at 5.69 per cent owing to the good Rabi season output.

It will, however, be difficult to sustain this growth momentum in the sector this quarter as the sowing period is underway. Hopefully, the revival of activity in other sectors can pick up the slack.

Apart from agriculture, another notable sectoral growth figure has been the contraction of the public administration services in Q1 of 5.05 per cent. This is even lower than the contraction witnessed in financial, real estate and professional services of 4.35 per cent.

But even there, GDP is expected to contract by roughly 5% in 2020, and Swedes are 11 percentage points more likely to think economic conditions in their country are poor than in 2019.In addition to the broadly negative assessments of current economic conditions, a few in the countries surveyed are hopeful things will get better in the next year.

A median of 35% think the economic situation in their country will improve in the next 12 months, while nearly half (46%) expect conditions to worsen and 19% think nothing will change. Majorities or pluralities in eight of the countries surveyed expect their national economies to decline further.

In Italy and Japan, this difference is less stark. In roughly half of the countries surveyed, a similar pattern exists when it comes to assessments of the future economic situation. For example, Belgians who negatively evaluate their country’s handling of COVID-19 are 23 points more likely than compatriots who approve of the government response to say their economy will worsen over the next 12 months.

Only in Canada and Australia are people with lower incomes more likely than those with higher incomes to rate the current economic situation as bad.

In the U.S., Denmark, Spain, Australia and Japan, men are more likely than women to rate the state of the economy positively, and in Germany, Sweden, Japan and South Korea, men are also more optimistic about the economy improving.

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