Coronavirus and Economic Impact.
1 de March de 2020
Popularly known as the new Coronavirus, this disease arises worrying authorities and nations around the world. An outbreak that started in China and spread, causing a series of social and economic problems in the affected countries. In just two months, the impacts of Coronaviruses can already be felt globally.
On December 31, 2019, Chinese authorities reported cases of diseases caused by a new type of coronavirus, called COVID-19 in the scientific community. The Coronavirus outbreak had its epicenter in Wuhan city, Hubei province, China. In this period, more than 80,000 cases have been reported in about 37 countries and more recently in Brazil, with the first case confirmed on February 2nd. The total death has already reached 2,700, mainly concentrated in China. The countries hardest hit to date are South Korea, Iran and Italy.
The World Health Organization has already reported that Coronavirus is configured as a public health emergency of international importance in order to improve the coordination and cooperation to prevent the spread of viruses.
The spread of the disease around the world raises concerns about possible impacts that can be generated on the global economy, since China, principally affected, currently corresponds to 16% of the world’s GDP. The outbreak already represents a large economic market, as factories and stores have closed, in addition to entire quarantined regions of the country, making that citizens don´t leave their homes for fear of infection. This viral outbreak has directly interfered with the country’s production and consumption.
With the impact on the Chinese production chain, the main partner countries’s commercial markets are also being affected, in addition to supply chains. According to a Trendforce report, smartphone production in 2020 may drop 12% compared to 2019. That is what low Chinese production directly affects component availability necessary for the manufacture of products. Other types of electronics can also be affected, such as TVs, monitors, tablets and notebooks. According to the American Chamber of Commerce (AMCHAM), From 109 american companies that have a factory in China, 78% suffer from the lack personnel, another 48% report that the closure of factories has already affected global supply chain. The areas most affected by growth in the number of infected with the new Coronavirus are tourism, technology, electronics and automobiles. The Chinese economy is expected to recover about 0.4 percentage points, down 6%, as a forecast for the last estimate of growth to 5.6%, data estimated by the MFI.
Trying to prevent this retraction, in addition to measures to combat the virus, China also seeks boost the economy’s recovery. Recently, medium-term rate cuts have been announced by the Chinese Central Bank.
Unlike the latest epidemics, the Chinese government has managed to be more agile, taking more stringent measures to prevent further spread of the Coronavirus, applying a generalized quarantine, national holidays extended, in addition to restricting travel to at least 20 provinces. For Kristalina Georgieva, Managing Director of the Monetary Fund International (MFI), global cooperation is essential for the containment of the viruses and their economic impacts, especially if the outbreak persists and disseminates to even more countries.