Understanding The Economic Impact Of COVID-19

"Difficult to predict the growth & inflation outlook as we have no assessment of how the lockdown will impact the economic activity, says D K Joshi, Chief Economist, CRISIL. He further added that we need to continuously revise the outlook as and when more information comes in.

Here are a few more points that economist D K Joshi made -

* Macro model which is typically used to forecast won't work in such a scenario. So, we need to go off-model.

* Non-linearity is extremely difficult for humans to assess.

* Re-assessment should happen continuously, as and when new information comes in.

* GDP will not give a true measure of the pain that the system is going through.

* If this situation continues for 3 months, small businesses may disappear and when the economy recovers, there will be a shortage of productive capacity.

Watch this episode of Fact File to know more details.