CNN Business :
The Wuhan coronavirus outbreak spooked financial markets last week. Now investors are on high alert for economic repercussions.
The virus appeared in the Chinese city of Wuhan last month and has since infected hundreds of people around the world, including three confirmed cases in the United States. The death toll in China has risen to more than 50.
“The rapid spread of the virus means there is no longer any doubt that it will disrupt the economy this quarter,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a recent note to clients.
The outbreak is bringing back memories of SARS, a highly contagious virus that caused a global panic in 2003. The virus, which originated in China, infected more than 8,000 people and killed 774. China’s GDP was choppy from quarter to quarter that year, as the country struggled with a steep drop off in travel and a slower expansion of retail sales in the wake of the outbreak. Still, the country’s economy grew by more than 10% in 2003, according to the World Bank, slightly faster than the previous year.
But investors and economists are right to be concerned about the coronavirus.
“Concerns are growing that the travel bans in place will start to have a major impact on the economy with some calling for a 1 percentage point hit or greater with Chinese GDP” in the first quarter of 2020, wrote Edward Moya, senior market analyst at Oanda.
The outbreak couldn’t have come at a worse time for the world’s second largest economy, which is still grappling with the impact from the US-China trade war. The closure of businesses like Shanghai’s Disney park could hit consumer spending at a delicate time.
The outbreak could also harm other parts of the global economy.
European markets climbed higher on Friday following better-than-expected economic data from Germany. But if China’s economy grows at a slower pace than expected, European countries that rely on exports could feel some pain.
The Wuhan coronavirus outbreak spooked financial markets last week. Now investors are on high alert for economic repercussions.
The virus appeared in the Chinese city of Wuhan last month and has since infected hundreds of people around the world, including three confirmed cases in the United States. The death toll in China has risen to more than 50.
“The rapid spread of the virus means there is no longer any doubt that it will disrupt the economy this quarter,” Julian Evans-Pritchard, senior China economist at Capital Economics, said in a recent note to clients.
The outbreak is bringing back memories of SARS, a highly contagious virus that caused a global panic in 2003. The virus, which originated in China, infected more than 8,000 people and killed 774. China’s GDP was choppy from quarter to quarter that year, as the country struggled with a steep drop off in travel and a slower expansion of retail sales in the wake of the outbreak. Still, the country’s economy grew by more than 10% in 2003, according to the World Bank, slightly faster than the previous year.
But investors and economists are right to be concerned about the coronavirus.
“Concerns are growing that the travel bans in place will start to have a major impact on the economy with some calling for a 1 percentage point hit or greater with Chinese GDP” in the first quarter of 2020, wrote Edward Moya, senior market analyst at Oanda.
The outbreak couldn’t have come at a worse time for the world’s second largest economy, which is still grappling with the impact from the US-China trade war. The closure of businesses like Shanghai’s Disney park could hit consumer spending at a delicate time.
The outbreak could also harm other parts of the global economy.
European markets climbed higher on Friday following better-than-expected economic data from Germany. But if China’s economy grows at a slower pace than expected, European countries that rely on exports could feel some pain.
