It may take 9 months for factories to be on track provided virus spread contained quickly: Industry
Industry also said the coronavirus pandemic has made the global economic recovery extremely difficult in the near-to-medium term, and India is also experiencing disruptions in many ways that have the potential to derail the growth story.
The World Health Organization (WHO) has already declared the coronavirus outbreak a pandemic. Globally, the virus has already claimed over 8,000 lives globally, including four in India.
"If the pandemic is contained in the next quarter, it will take two to three quarters before factories can operate at capacity, and the global supply chain starts to get back to normalcy," said industry chamber Assocham.
The report also expressed apprehension that with more people encouraged to work remotely and businesses shutting stores or plying lesser hours, the economy is expected to witness a fall in consumer confidence and spending.
Another leading industry body FICCI said the coronavirus outbreak could gorge a deeper impact now as the global economy is already going through a slow phase currently, including China.
"A crisis of this magnitude can therefore translate into a bigger slump for the world economy at this juncture. Apprehensions regarding the current slowdown turning into recession also cannot be ruled out at this point of time," it said.
S&P Global Ratings on Wednesday said global economy has entered recession.
FICCI said there was a strong hope of recovery in the last quarter of this financial year.
"However, the new coronavirus epidemic has made the recovery extremely difficult in the near-to-medium term.
"Like other affected economies in the world, India is also experiencing disruptions in many ways which have the potential to derail India's growth story," it said.
Assocham further said that if the virus spreads more pervasively, and there is a need for tighter restrictions of movement of goods and people and many more shutdowns across India, the economy could witness a prolonged recession.
"In such a scenario, the recovery would be L-shaped, where the economy is stuck in recession throughout the year, taking the country longer to bounce back," it said.
Avoiding this scenario is the top-most priority of governments across the world and India, which has been struggling with a sluggish economic environment, Assocham added.
The eventual recovery from this pandemic in India is dependant on the extent of the spread within the country and across global markets, said industry bodies.
Additionally, government intervention across all markets would define the rate of recovery. RSN NKD CS HRS