China is the world’s largest exporter of intermediate manufactured products — components destined for use in supply chains across the world. The longer the coronavirus curtails China’s industrial output, the bigger the risk of disruption to factories and economies elsewhere. Here is how the outbreak is expected to hit the global economy:
Is how much the global economy stands to lose due to the outbreak. According to the Centre for Economics and Business Research (CEBR), an interconnected global economy is feeling the strain of China’s viral outbreak — and a potential $160 billion (Dh587 billion) hit in lost growth that may be on the way. “Our worst-case calculation assumes that the coronavirus has a six times multiple effect on the Chinese economy. As the Chinese economy is nearly four times larger relative to the world economy [than in 2002], scaling up for this as well would create a world GDP negative impact of 1.8 per cent to 6 per cent based on the retrospective estimates of the impact of Sars,” the CEBR said in a report.
Is what the GDP growth will fall to this year, thanks to the virus. In the years since Sars, China’s annual economic output has multiplied more than eightfold, to nearly $14 trillion from $1.7 trillion, according to the World Bank. Its share of global trade has more than doubled, to 12.8% last year from 5.3 per cent in 2003, according to Oxford Economics. China’s economic growth is expected to slip this year to 5.6 per cent, down from 6.1 per cent last year, according to a conservative forecast from Oxford Economics that is based on the effect of the virus so far. That would, in turn, reduce global economic growth for the year by 0.2 per cent, to an annual rate of 2.3 per cent — the slowest pace since the global financial crisis a decade ago.
Basis points is what the US economy is expected to shrink by due to the coronavirus outbreak. The White House National Economic Council and the Council of Economic Advisers are jointly assessing both the potential short-term and long-term effects of the coronavirus, with fears mounting over the virus’s spread into the United States.
It’s easy to see how. Starbucks has closed more than 2,000 outlets across China. McDonald’s has shut hundreds of restaurants. Some Walmart Inc. stores are running out of products. Walt Disney Co.’s theme parks in Shanghai and Hong Kong have gone dark. Apple has shut its stores and factories — with roughly 10,000 direct employees in China, and its supply chain has a few million workers manufacturing products like the iPad, iPhone and Apple Watch.
Is the total number of Chinese tourists that visited countries around the world in 2018, accounting for nearly a third of travel retail sales worldwide. Global tourism markets will therefore take an outsize hit due to the virus outbreak. Thailand, for example, has already reduced its 2020 GDP forecast, based on expected revenue losses of as much as $1.6 billion from 2 million fewer Chinese visitors, should travel restrictions continue for a further three months. International airlines, including American, Delta, United, Lufthansa and British Airways, have cancelled flights to China.