Global Economic Losses of Corona Virus
Among the broiling political events in the world, the outbreak of the deadly Coronavirus Disease 2019 (COVID-19) is one of the issues that has been on the news since the beginning of this year.
The virus was identified in late December in Wuhan City of China, where some 9 million people reside. However, the threat of the virus has not only persisted in China but also spread rapidly to other countries around the globe.
The World Health Organization (WHO) said in a report that so far 90933people have been infected and 3119 have died.
With the outbreak of the disease, all airports and train stations have become closed to outbound passengers and subway networks, boats and other long-distance transport have been suspended.
WHO has declared a state of emergency according to which unprecedented quarantine regulations have been put in place in Wuhan to prevent the spread of the disease. All roads and streets towards outside of the city have been blocked and flights have been canceled.
Most Wuhan residents have been advised to avoid crowded areas and minimize public gatherings. And the same are advised to all cities and towns where the virus has been spread.
Based on data from Chinese Center for Disease Control and Prevention (briefly as China CDC), 4.7 percent of cases were acute. In a study on 44,000 patients in China, 80% of them had mild symptoms.
The virus has spread to 44 countries around the world, the numbers are as follow[1]:
|
Number |
Country | Number | Country | Number | Country |
| 322 | Italy | 1,146 | South Korea | 77,754 | China |
| 57 | US | 91 | Singapore | 91 | Iran |
| 23 | Bahrain | 31 | Taiwan | 37 | Thailand |
| 18 | Germany | 22 | Malaysia | 22 | Australia |
| 13 | UAE | 14 | France | 16 | Vietnam |
| 11 | Kuwait | 11 | Canada | 13 | London |
| 3 | Philippines | 3 | India | 6 | Spain |
| 1 | Algeria | 2 | Russia | 2 | Oman |
|
Total: |
90,933 |
||||
The figure is cumulative if the way to prevent the outbreak is not met, or vaccine or co-medication is not provided. [2]
Impact of the COVID-19 on the world economy:
While Chinese officials have reported signs of slowing down the spread of the coronavirus, the negative effects of the disease have gradually become apparent in the global economy.
The outbreak of COVID-19 came with restrictions, a decline in the number of foreign trips and a halt to economic activity, especially in some parts of China, which had a negative impact on the economies of the Far East.
Apple, a mobile phone producer, said the disruption in China’s economic activities would benefit its production and supply and lower its profits.
Singapore Airlines has also said that because of the pest, demand for air travel due to the spread of the disease, it has reduced its flight plans worldwide, especially in the Middle East.
President of South Korea, Moon Jae-in, said the outbreak was an economic crisis.
The Hong Kong local government has also said it plans to raise $3.6 billion to help tackle the economic impact of the virus. Particularly when Liu Zhiming, director of a hospital in Wuhan, died of the disease, and shortly before him, the doctor who first had detected the virus, also lost his life.
The Chinese economy was more stable in the last three months of the year. The initial trade agreement between the United States and China was one of the factors contributing to the stabilization of the country’s economic situation. After a record slowdown in China’s economic growth rate in the last three months of last year, hopes for a recovery in China’s economy have been raised.
Need to mention that China’s economic growth rate in the last three quarters of last year had reached six percent, and this has been unprecedented in the past three decades.
The main center of the COVID-19 outbreak is Wuhan City. Wuhan is very important from the point of view of transportation of goods. Many of the world’s largest corporations, including the German companies like Bosch, have branches in the city. Branches that play an important role in transporting goods to these companies.
Now these companies have had to change the route they transport their goods. China’s economic growth rate fell by about one percent during the SARS outbreak.
According to economic analysts this time around, the Corona Virus could cut China’s economic growth rate by one and a half percent.
Control of the SARS virus in China took seven months. Whenever it is time to control the coronavirus, it is conceivable that the economic consequences will be wider than the crisis in SARS.
The proliferation of the Corona Virus has taken the breath of the stock markets in Germany and other European countries. The price of the DEX Stock in Germany dropped to its lowest level in February this year.
The rapid spread of the virus in Italy and South Korea has cast a shadow of fears and anxieties once again over the weekend. The price of the stock market indexes, including DEX, declined harshly in Germany, and oil prices dropped sharply.
Alongside this trend is its own market in China, which is one of the largest markets for Japanese and German cars. There was a significant crisis, and China’s sales in the first two weeks of February saw a decline of 6 percent.
The tourism industry is one of the areas where the spread of the Corona virus has had a direct impact. Recent developments suggest that the only tourism industry in Asia has lost close to $115 billion in the Corona outbreak.
Experts from Dutch bank ING have released a report called “Vacation in Hell”, stating that tourist trips to and from China have been suspended.
On the one hand, it takes time to take away travel restrictions and on the other hand, the tourists themselves are much more cautious and try not to lower the risk factor and to avoid traveling to or from China.
According to estimates from the Oxford Institute of New Economic Thinking, the virus has spoiled about $1.1 trillion in global economic activity.
Reducing China’s economic growth from 6 percent to about 5 percent in 2020 could lead to a 1 percent decline in world economic growth, as China accounts for 32 percent of global economy growth, about 20 percent of world GDP, 12 percent of total exports. And 9% of the world’s total imports are involved. This impact could undermine the growth rate of the world economy and destabilize financial markets.
Decline in world oil prices (down from $ 70 per barrel in December 2019 to $ 56 per barrel in February 2020).
Demand for gold increased (the price of gold rose to $1,680 an ounce while in December 2019 it was around $1,520).
China is one of the largest manufacturers of flash memory and small components for electronics manufacturers such as Apple, Nissan and Honda in the world. The price of these small electronics has risen by 25 percent.
World Airlines will lose nearly $30billion in revenue by 2020, according to estimates by the International Air Transport Association.
Decline in the tourism industry globally, in 2019 the world tourism industry was valued at about $1 trillion, with the Chinese share of the industry alone at $127 billion.
China’s economic growth rate is likely to decline by 1% if the emergency continues due to the spread of the Corona virus. China’s economic difficulties can have a devastating effect on the German economy and other countries in the world.
Countries whose economic structure is export-dependent are more affected by the spread of the Corona virus. It’s not just about the Chinese economy. Countries like Germany will also face severe economic problems as a result of the slowdown in economic growth.
The economic consequences of continuing a state of emergency due to the outbreak can be estimated from the experience of past 17 years or it could be a huge loss if it takes a long time to cure the virus. [3]
[1] https://www.who.int/emergencies/diseases/novel-coronavirus-2019
[2] 25-feb-2020
[3] https://youtu.be/BrDc6KpW1uo
https://www.google.com/amp/s/www.bbc.com/persian/amp/world-51542011