China’s GDP growth is expected to fall from six percent last year to 5.4 percent in 2020 due to the spread of the COVID-19 virus, said the latest report by Oxford Economics
It has modeled two scenarios on the coronavirus outbreak morphing into pandemic. Under the first scenario, if it spreads more widely in Asia, world GDP would fall by $400 billion this year, or 0.5 percent. The second scenario foresees the global GDP dropping $1.1 trillion or 1.3 percent, if the virus outbreak becomes a pandemic and a disruption to manufacturing in Asia spreads worldwide. Such a decline would be the same as losing the entire annual output of Indonesia, which is the world’s 16th largest economy.
“Our scenarios see world GDP hit as a result of declines in discretionary consumption and travel and tourism, with some knock-on financial market effects and weaker investment,” wrote the analysts.
Oxford Economics said it still expected the impact of the virus to be limited to China and to have a significant, but short-term impact, bringing world GDP growth just 0.2 percent lower than January at 2.3 percent.
The growth of new confirmed cases of the deadly coronavirus has slowed down this week, but experts warn it is too early to call the all-clear for the risk of a pandemic. So far, there are over 75,500 confirmed cases and more than 2,100 deaths.
Yet, we have a… “winner”!
Wilbur Ross Claims Coronavirus Will Be Good For American Jobs
U.S. Commerce Secretary Wilbur Ross said that the deadly coronavirus will be good for American jobs in the long run, comments that immediately sparked outrage as the disease has killed more than 150 people and infected over 7,000 in its rapid spread across China and to other countries.
- “I think it will help accelerate the return of jobs to North America, some to U.S., probably some to Mexico as well,” the Commerce Secretary said.
- His comments came as a response to host Maria Bartiromo’s question about whether the coronavirus will cause the Chinese economy, which commands a large percentage of global economic growth, to “come to a halt.”
- While Ross said that while he didn’t want to “talk about a victory lap over a very unfortunate, very malignant disease,” he pointed out that “the fact is, it does give businesses yet another thing to consider” when reviewing their supply chains.
- He also compared the virus, which has taken a toll on global markets, to the 2003 SARS epidemic, calling it yet “another risk factor that people need to take into account.”
- Ross described how many U.S. companies will need to consider alternatives once they shut down operations in China due to the spreading virus: “There’s a confluence of factors that will make it very, very likely that there’s more reshoring to the U.S.”
- “You’ve already heard Apple talking about figuring out how to replace some of the Chinese production,” he pointed out, while also adding, “you had others also doing the same thing.”