China’s coronavirus epidemic threatens global economy

The rapidly spreading coronavirus outbreak in China continues to rattle global markets as investors and policymakers assess the risks posed by the SARS-like virus to the global economy

Stocks around the world took a beating as the death toll from the virus reached 170 and more cases were reported. India became the latest country to report a case — a student in Wuhan, the epicenter of the outbreak.

“Markets will remain highly volatile as long as they feel that they only have an incomplete picture of what is going on, and what is going to happen next,” said Agathe Demarais, global forecasting director at the Economist Intelligence Unit.

Read more: Coronavirus: Everything you need to know

China — the world’s second largest economy — is called the world’s factory and plays a key role in global supply chains. Experts say it is this huge presence of China in the world economy that must be considered while assessing the impact that the virus outbreak could have on the global economy.

“China’s economy is very important in the global economy now, and when China’s economy slows down we do feel that — not as much though as countries that are near China, or that trade more actively with China, like some of the Western European countries,” US Federal Reserve Chair Jerome Powell said.

Zhang Ming, an economist at the Chinese Academy of Social Sciences, projected the outbreak would cut China’s first-quarter growth by one percentage point to 5% or lower.

Top companies brace for disruptions

The outbreak has caused limited supply chain disruptions so far because many facilities were already closed for the Chinese New Year holidays, but there are growing concerns that the factories may remain shut for longer than usual. Also fueling concern over the damage to productivity, thousands of factory workers on holidays may struggle to get back to work next week, due to travel restrictions.

The epidemic has been one of the major talking points during companies’ earnings calls this week. In the US alone, the word “virus” or “coronavirus” was mentioned by 27 different companies, including iPhone maker Apple, Starbucks and McDonald’s, a CNBC analysis showed.

Apple, which posted record earnings on Tuesday, provided a wider-than-usual guidance for the ongoing quarter in view of the uncertainty around the impact of the virus. Virtually all iPhones, Apple’s top money-spinner, are made in China.

Tesla expects a delay in production ramp-up at its newly opened plant in Shanghai. German auto-parts maker Robert Bosch said it was monitoring the situation to assess if there would be any delays in restarting production at its two Wuhan facilities, which are closed for the Lunar New Year.

Japan’s Toyota has also halted production in China through February 9. McDonalds and Starbucks have shuttered hundreds of stores in the country. Swedish furniture retailer Ikea said it will close all its 30 Chinese stores “until further notice,” in response to the outbreak.

Several airlines have suspended flights to China including Lufthansa, British Airways, Air Canada and American Airlines.

“Apart from the risk to human lives, it is likely to hit travel and consumption activities. In a scenario of widespread infection, it could materially weaken economic growth and fiscal positions of governments in Asia,” SP said.

Bigger fallout than SARS

Analysts are already comparing current epidemic to the 2002-2003 Severe Acute Respiratory Syndrome (SARS) outbreak that caused about 800 deaths.

The global cost from SARS was estimated at $33 billion, or 0.1% of world GDP in 2003.

Many say the impact of the current virus outbreak on global growth could be bigger this time as China now accounts for a larger share of the world economy.

ap/uhe (Reuters, AFP)

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Pneumonia-like virus hits Wuhan

  On December 31, 2019, China notifies the World Health Organization of a string of respiratory infections in the city of Wuhan, home to some 11 million people. The root virus is unknown and disease experts around the world begin working to identify it. The strain is traced to a seafood market in the city, which is quickly shut down. Some 40 people are initially reported to be infected.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  New strain of coronavirus identified

  Researchers initially rule out the SARS virus, the deadly respiratory illness that originated in China in 2002, killing nearly 800 people worldwide. On January 7, Chinese scientists announce they’ve identified a new virus. Like SARS and the common cold, it is in the coronavirus family. It is temporarily named 2019-nCoV. Symptoms include fever, coughing, difficulty breathing, and pneumonia.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  First death in China

  On January 11, China announces the first death from the coronavirus — a 61-year-old man, who had shopped at the Wuhan market, dies from complications with pneumonia.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Virus reaches neighboring countries

  In the following days, countries such as Thailand and Japan begin to report cases of infections in people who had visited the same Wuhan market. In China, a second fatality is confirmed in the city. By January 20, three people have died in China and more than 200 are infected.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Transmission unclear

  Through mid-January, scientists scramble to find out how the illness is being spread among people. Coronaviruses are zoonotic, meaning they are transmitted from animals to people. Some coronaviruses can be transmitted by coughing and sneezing. Airports around the world begin screening passengers arriving from China. On January 20, officials confirm the virus can be passed directly between humans.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Millions under lockdown

  China places Wuhan on quarantine on January 23 in an attempt to limit the spread of the virus. Transportation is suspended and workers attempt to quickly build a new hospital to treat infected patients, which total over 830 by January 24, as the death toll climbs to 26. Officials eventually extend the lockdown to 13 other cities, affecting at least 36 million people.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  A global health emergency?

  More and more cases are confirmed outside of China, including in South Korea, the US, Nepal, Thailand, Hong Kong, Singapore, Malaysia and Taiwan. As the number of infections rises, the World Health Organization on January 23 determines that it’s “too early” to declare a global public health emergency.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Coronavirus reaches Europe

  On January 24, French authorities confirm three cases of the new coronavirus within its borders, marking the disease’s first appearance in Europe. Hours later, Australia confirms four people have been infected with the respiratory virus.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Lunar New Year holiday extended

  The Chinese Lunar New Year begins with subdued festivities on January 25. Officials cancel many major events in a bid to contain the outbreak, as millions of Chinese travel and take part in public celebrations. By late January, 17 Chinese cities, home to more than 50 million people, are in lockdown. Lunar New Year holidays are extended by three days to limit population flows.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Borders with Mongolia, Hong Kong, eastern Russia close

  Cambodia confirms its first case, while Mongolia shuts its border with China for cars and Russia closes its borders in three regions in the Far East. The cost to global tourism is put in the billions and oil prices also plummet. The death toll rises to 41, with over 1,300 infected worldwide — mostly in China. Scientists hope to have the first coronavirus vaccines ready within three months.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  Germany braces for virus

  On January 27, German Foreign Minister Heiko Maas says Germany is considering evacuating German nationals from Wuhan. There are no reported cases in Germany yet but officials are preparing to fight the virus. German researchers in Marburg are part of international efforts to work on a possible vaccine for the coronavirus. The death toll in China reaches 81, with 2,700 affected worldwide.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  First cases confirmed in Germany

  On January 27, Germany announces its first known case of the virus — a 33-year-old in Bavaria who contracted it during a workplace training with a visiting Chinese colleague. He is put under quarantine and observation at a Munich hospital. The following day, three of his colleagues are confirmed infected. The death toll in China reaches 132, with around 6,000 infected worldwide.

• Coronavirus: Timeline of the deadly virus in China and worldwide

  International evacuations begin

  On January 28, Japan and the US are the first countries to evacuate some of their citizens from Wuhan. Four of the Japanese passengers are taken to the hospital with fevers on arrival. Australia and New Zealand say they will also send planes to bring their citizens home. Global cases mount to nearly 6,000 infections, more than the 2002-03 SARS outbreak that killed roughly 800 people.

  Author: Cristina Burack, Elliot Douglas, Dave Raish

Article source: https://www.dw.com/en/china-s-coronavirus-epidemic-threatens-global-economy/a-52205088?maca=en-rss-en-bus-2091-xml-atom