World News About Coronavirus
The spread of the coronavirus has pushed the pause button on one of the world’s biggest economic powerhouses. ABC News
We’re coming on the air at this hour with breaking news there Wall Street ending one of the worst weeks of trading since the financial crisis in 2008. CNBC News
We’re starting to get to that point where the supply chains are going to have massive disruptions.
When the world was first hit with SARS almost 20 years ago, it caused an economic blip, mostly for China and its neighboring countries. But at the time China’s gross domestic product was only 4 % of the global total. And now stands at 16 %, making China the second largest economy behind the U.S. One major driver behind Chinese economic rise was its massive network of factories, which churn out everything from T-shirts to mobile phones for consumers all over the world. Today China makes up a ⅓ of world manufacturing and is the world’s largest exporter.
Decades of globalization have created supply chains so deeply interconnected that when there are issues in China’s economy, it’s felt across the Globe.
Ben May, Director, Global Macro Research Oxford Economics, ‘We’re in a situation where when China the shutdown in various factories and other places of work isn’t producing various bits, that may be vital input into production in other economies. So, that is causing ripple through effects around global supply chains.’
Worst Week Since the Global Financial Crisis of 2008
In an effort to hold the spread of Coronavirus Wuhan China the epicenter of the virus was sealed off. In China mandated factory shutdowns across most of its provinces. High-end A motors had to suspend production in South Korea in early February after not receiving parts it usually gets from China. Apple felt the crunch as well. While the company designs and sells the iPhone, it doesn’t manufacture its components. It relies on a complex web of facilities throughout the world to source its parts with a heavy reliance on China.
Due to the Coronavirus impact Apple has warned that sales are expected to fall short of targets since fewer iPhones will be available for sale. While these are some high profile cases, the hysteria around Coronavirus has made investors nervous. The last week of February saw the U.S. stock market suffer its worst week since the global financial crisis of 2008.
The U.S. and the Canadian central banks have slashed interest rates by half a percentage poin in response to mounting economic concerns. And the Organization for Economic Cooperation and Development said, ‘Global growth could be cut in half to 1.5 % in 2020.’ If the virus continues to spread but as of now the spread of the Coronavirus is too unpredictable. Economists say, for a recession to happen the Coronavirus would have to reach pandemic levels. Whether or not that happens is still unknown.
Kristalina Georgieva, Managing Director International Monetary Fund, ‘What we are wrestling with is uncertainty and that defines our projections which at this point lead us to state that global growth in 2020 will dip below its last years levels but how far it will fall and how long the impact would be is still difficult to predict’.
So, how the Coronavirus will truly impact the world economy will heavily depend not only on its severity or duration but also on whether consumers start to change their spending behaviours based on that fear.
Sources www.abcnews.go.com | www.cnbc.com | www.scmp.com | www.bbc.com | www.oxfordeconomics.com | www.oecd.org