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What is GDP ?
OECD defines Gross domestic product (GDP) as
"measure of the value added, created through the production of goods and services in a country during a certain period".
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OECD defines Gross domestic product (GDP) as
"measure of the value added, created through the production of goods and services in a country during a certain period".
___________
Can any goods be produced when a pandemic has forced people to remain indoors and all the industries to close ?
.
Can services be provided when everything is shut down globally?
(Tourism, Accommodation, Aviation, Railways, Entertainment, Pubs, Dining, etc. are all services).
.
Can services be provided when everything is shut down globally?
(Tourism, Accommodation, Aviation, Railways, Entertainment, Pubs, Dining, etc. are all services).
In addition,
While no goods and services was being produced across the world, every government was only SPENDING what they had accumulated.
Spending on free food and grains,
Spending on free tests,
Spending on police and administration,
Cont....
While no goods and services was being produced across the world, every government was only SPENDING what they had accumulated.
Spending on free food and grains,
Spending on free tests,
Spending on police and administration,
Cont....
Spending on every deptt to control the pandemic.
Spending on stimulus packages,
Spending on paychecks (in some countries)
While income,production & services were almost 0,public expenditure shot up due to pandemic.This holds true for every govt in the world,without an exception.
Spending on stimulus packages,
Spending on paychecks (in some countries)
While income,production & services were almost 0,public expenditure shot up due to pandemic.This holds true for every govt in the world,without an exception.
Now, imagine the simple situation of a family as a very simple analogy.
- Two people work to create goods, provide services and earn an income.
- One day, both suffer from a disease and have to sit at home where they can not produce goods or provide service.
Cont...
- Two people work to create goods, provide services and earn an income.
- One day, both suffer from a disease and have to sit at home where they can not produce goods or provide service.
Cont...
- Now, there is no income in the family. But the expenses are more than before - treatment, medicines, food, care, children, etc.
Will their savings increase at a positive rate in that period ?
Cont..
Will their savings increase at a positive rate in that period ?
Cont..
More importantly, would you blame the head of the family for loss of their savings and economic hardship ?
Extrapolate this scenario to about 7 Billion people globally in 200 odd countries.
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Extrapolate this scenario to about 7 Billion people globally in 200 odd countries.
_____________
Now, if you believe that any government is responsible for this contraction/shrinkage (in any country) and a leader could have prevented the shrinkage, then 
.
.
And if you were genuinely expecting that after a complete global lockdown and a severe pandemic affecting more than 25 million people already, GDPs of countries in this quarter will expand, then your optimism deserves a standing ovation !
