(This blog is written by Astha Agarwal. She is a law undergraduate at Symbiosis Law School, Noida)
Introduction
The outbreak of the novel coronavirus pandemic, COVID-19, has taken the world by surprise, with the serious crisis emerging out in the form of health crisis, economy crisis, etc., across the whole world. The rapid spread of the virus among the people through contact or even through being in a close proximity of a virus infected person has forced the governments of various nations to call for social distancing measures and stringent lockdown across the whole nation. These stringent lockdowns, though taken after sensing the gravity of the situation and in the interest of the nation, are heavily affecting the economy of the nations, thereby plunging the whole of the global economy into a situation of an unequaled recession.
The battle against the pandemic is on and the nations are trying their best to fight against the virus but amidst this havoc, it has become very difficult for the nations to keep the economy running with the same pace and also keep the crime rate under control. Though the direct costs of this outbreak are the steep increase in the mortality rate and the steep increase in the rate of medical expenses to apply a break to the speeding multiplication of this deadly virus, but the indirect costs are also falling heavily on the governments across the world. These indirect costs relate to the fall in the economic growth, growth of the fake news by the media, increase in cybercrime, recession, delay in judgements and piling up of cases, etc.
It is to be observed that when there was the outbreak of the pandemic for the first time, it was seen as a humanitarian crisis, but now with the deepening of the deadly effects of this pandemic, it is transforming into a ‘seismic black swan event’, directly and indirectly attacking the global economy and the global legal framework. Thus, the most effective attacks are explained below.
Recession-An effect of Corona
With the deepening of the pandemic crisis, the engines of the growing economies are crushing to a halt, with the pandemic mutating into the economic crisis of the world. The stringent lockdowns imposed all over the world have brought the operation of all the major companies, all the cross border transactions, all the Mergers and acquisition contracts, the operation of the stock markets, to a halt. Thus the cessation of the operation of these major factors supporting the economy has pushed economies to the line of threshold, leading to the situation of recession in the global economy.
It is reported by the United Nations labour agency that the rapid increase in the intensity of the economic effects of the pandemic, globally, is turning out to be worse that the financial crisis of the 2008-2009 period. This is expected to lead to a falloff of around 200 million full-time workers during the coming three months[i]. It is expected that the catastrophe is leading to a state of recession not seen in the last 150 years[ii]. Thus, it is for sure that a deep financial crisis and the state of global recession are unavoidable.
The sectors such as tourism, hospitality, aviation are facing a crash in the operations with the lockdowns having a direct impact on their business. Tourism and aviation together provides a major contribution to the economy of nation, but with the imposition of the restriction on the movement and the travel ban, there have been the jamming of their engines. The Corporate sector is undergoing a serious problematic situation with their liquidity getting crunched due to the increase in the rate of the withdrawals by the stakeholders and also due to the reduction in the lending by the financial institutions and banks. Cross border transactions are facing a severe hit due to the closure orders of the international borders. A fall in the mergers and acquisitions activities is expected during and after the lockdown period. The global stock markets have suffered a heavy loss during the last weeks with trillions of dollars of worth it being shed.
In accordance to the recently updated estimate, it has been observed that the current lockdown measures will lead to a reduction in the global GDP by 2.0% every month and on an aggregate, 24% if taken annually[iii]. An update released by IMF reported that the global economy is going to experience the worst recession that has ever been experienced since the Great Depression.
Rise in Cyber Crime
The stringent lockdowns imposed by the nations all over the world have led to a surge of wave of the new trend of working from home to contain the further spread of the deadly virus. Thus with an increase in the use of the online networking sites for their work or for seeking latest updates about the virus, the cybercriminals have chosen to grab this opportunity for their commercial gain. They believe it to be the best opportunity to exploit the nations easily because all the cyber defences are not working with the same alertness due to the shift of focus towards the health of the people and also as people cannot afford to log out of their systems being amid such crisis.
The increase in the number of the work from home employees has led to the amplification of the use of services like Virtual Private Networks (VPN)[iv], which is being used as a target by the cybercriminals for compromising these servers. Taking advantage of the people’s need to track the spread of corona virus, fake dashboards showing maps to track the virus spread are being circulated by them that aims at infecting the user’s systems with malwares. Malicious sites masked as the reliable source of the COVID 19 information are being spread by them which when opened steals the personal information of the users like login credentials etc. Without leaving any opportunity, they are sending phishing emails disguised as genuine sites for donations, or for the latest updates and are even impersonating the organisations that are trustworthy[v].
Their one of the major target includes attacking the online shopping sites selling medical products like face masks, hand sanitizers etc. with direct phishing emails. Emails, encrypted with ‘Trickbot’ which is a hidden tracking malware, are being sent by them offering corona virus tests with the aim of recording the passwords and the data of the banks[vi]. Voicemail notifications on corona virus theme are being sent by the hackers in Office 365 for stealing credentials. The cybercriminals are next aiming at the communication websites like zoom. The Indian national cyber security agency reported about the high vulnerability of application called zoom, a video conferencing app that is being used all over India, towards the cyber-attack.
According to the U.S. Federal Trade Commission (FTC), a total of 18257 cyber complaints have been registered between January 1 and April 15. A total financial loss at the rate of 46% of the victims of fraud has been reported, making the total loss to $13.44 million[vii]. FBI on 18 April reported a spike in the number of the cybercrime reports with the reports increasing by fourfold when compared to months before the outbreak[viii].
Conclusion
In the current scenario, though the closures and lockdowns will continue to be imposed for a few more months, but the effect that they will leave behind is definitely going to be long lasting. It is expected that the post-COVID world will emerge out to be way different when compared to the pre-COVID world, precipitating a change in the global outlook towards the rearrangement of government priorities with the health of the people leading the list. The global economy will continue to suffer grimly till the resolution of the heath crisis. Even after the heath crisis is resolved, the damage caused to the businesses, the stock markets, the debts markets, and all the major sectors will continue to have the lingering effects.
Though the fiscal authorities and the central banks around the world are trying to soften the harshness of the outbreak, the capital continues to pour out of the market at an exceedingly high rate. The developing countries are suffering an enormous blow with depreciation of currencies, falling of commodity prices, decline in exports, etc. These economic, administrative, and fiscal crises in combination with the major ongoing health crisis will have a catastrophic effect on these nations, halting their progress.
Such speedy evolution of the outbreak is pumping up other major issues also thereby making it one of the biggest global challenges, needed to be won by the world in any cost. With the wake of this conundrum, it has become very important to put a permanent full stop to it to protect the world from sinking into the deadly pit dug by this COVID 19 pandemic.
Footnotes:
[i] COVID-19: impact could cause equivalent of 195 million job losses, says ILO chief, UN NEWS, (Apr 8, 2020) https://news.un.org/en/story/2020/04/1061322
[ii] Kenneth Rogoff, Mapping the COVID 19 Recession, PROJECT SYNDICATE, (Apr 7, 2020), https://www.project-syndicate.org/commentary/mapping-COVID19-global-recession-worst-in-150-years-by-kenneth-rogoff-2020-04
[iii] Global Economic Effects of COVID-19, CONGRESSIONAL RESEARCH SERVICE, (Apr 17, 2020) https://fas.org/sgp/crs/row/R46270.pdf
[iv] Coronavirus (COVID-19) related cybercrime on the rise, LNB NEWS (Apr 9, 2020) https://www.lexisnexis.co.uk/blog/COVID-19/coronavirus-(COVID-19)-related-cybercrime-on-the-rise
[v] COVID-19: CERT-In says spurt in cyberattacks on personal comps since ‘work from home’ protocol began, THE ECONOMIC TIMES, (Mar 28, 2020, 09:07), https://cio.economictimes.indiatimes.com/news/digital-security/COVID-19-cert-in-says-spurt-in-cyberattacks-on-personal-comps-since-work-from-home-protocol-began/74857218
[vi] Investigate | COVID-19 Cybercrime Daily Update, TEAM RISKIQ, (Apr. 24, 2020), https://www.riskiq.com/blog/analyst/COVID19-cybercrime-update/
[vii] Investigate | COVID-19 Cybercrime Daily Update, TEAM RISKIQ, (Apr. 24, 2020), https://www.riskiq.com/blog/analyst/COVID19-cybercrime-update/
[viii]Catalin Cimpanu, FBI says cybercrime reports quadrupled during COVID-19 pandemic, ZDNET, (Apr 18 2020, 17:26), https://www.zdnet.com/article/fbi-says-cybercrime-reports-quadrupled-during-COVID-19-pandemic/
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