While authorities in China have spent the past two weeks battling the physical spread of the deadly coronavirus outbreak, there is now a new front beginning to open up — one that indeed may have far more serious impact than the actual virus itself.
When Sars emerged from China some 18 years ago, economics and public health analysts have generally agreed it had a negative impact of some $40 billion (Dh147 billion) on the global economy then. Fast forward to the current crisis, and the economic impact of this coronavirus could indeed prove to be its biggest impact.
The outbreak of the virus in Wuhan coincided with the annual Chinese New Year festivities. The negative was that the festival is a time where millions of Chinese citizens travel to celebrate with friends and family. Before public health authorities in Wuhan had a full understanding of the threat posed by the coronavirus and before they could place the city of 11 million under effective quarantine, many had left the region to participate in family gatherings in their far-flung homes. That one factor made this outbreak difficult to fight.
China’s economy is expected to contract 0.5 per cent as a result of the virus so far — and that will drag global growth down by 0.2 per cent. Beijing has set aside $22 billon to assist companies and investors affected by the virus.
The positive was once the seriousness of coronavirus became known, Chinese authorities extended the festive holidays, gaining time to put in place public health and quarantine methods to isolate those infected with the virus. Those holidays are now largely over.
The big difference between 2002 and now is that China’s economy has developed greatly in the high-tech sector — producing devices and components that are critical to the global economy now. As well as the widespread closure of shopping malls, factories that produce cars, cell phones, computers, computer chips and countless other products are now closed for that extra week — or more.
Impact on global trade
As things stand now, China’s economy is expected to contract 0.5 per cent as a result of the virus so far — and that will drag global growth down by 0.2 per cent. Beijing has set aside $22 billon to assist companies and investors affected by the virus. The impact of coronavirus comes hard on the heels of the negative effects of tariffs imposed by Washington on goods from China.
Simply put, this is now a double whammy on the global economy at a time where there are doubts about its overall health. Figuratively, when China sneezes, the global economy catches a cold. Suddenly, coronavirus seems a far more serious ailment for global trade.
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