Coronavirus Impact on World Economy – Free PDF Download

WHAT IS ECONOMIC INTERDEPENDENCE?

• A system in which countries are economically dependent upon each other.
• This interdependence is a product of labor specialization.
• Globalization is the by-product of economic

CHINA’S INFLUENCE ON THE GLOBAL ECONOMY

• It is the world’s largest manufacturer.
• Imports more crude oil than any other country.
• Chinese travelers are the top spenders in international tourism, making 150 million overseas trips worth $277 billion in 2018.
• The country’s 3 billion population provides the largest market in the world for several categories of consumer goods.

REACTIONS IN CHINA

• Sixteen cities in China, with a combined population of more than 50 million people, are on lockdown.
• Businesses in 14 provinces and cities, may not resume operations for another week even after annual Lunar New  Year holiday.
• These businesses account for more than two-thirds of China’s economic output.
• General Motors and Honda ,Apple We Work  IKEA

REACTIONS FROM THE WORLD

• Airlines around the world are canceling flights to China.
• Countries including the US are urging residents not to travel to the country at all.
• Russia and Mongolia have closed their borders with China.
• Investors have moved their money to safe havens like the S. dollar, the Japanese yen and gold.

BLACK SWAN EVENT

• A term used to describe
• An unpredictable event with unexpected and potentially severe consequences, for the global economy.
• China will be the economy most affected by the outbreak.
• But given its centrality to international trade as an exporter & increasingly an importer, it will certainly  impact the world economy

WHAT HAS BEEN THE IMPACT SO FAR?

• The prices of some commodities, including oil, have declined
• Streets in megacities like Beijing and Shanghai are nearly empty.
• It is already apparent that the Wuhan coronavirus will hit tourism hard.
• It is hurting production chains, today many companies are dependent on Chinese production.

GDP IMPACT

• A 2017 paper by economists Victoria Fan, Dean Jamison and Lawrence Summers,
• Estimated that the expected annual losses from pandemic risk to be about- $500 billion — or 6% of global income — per year

ECONOMIC COST OF SARS OUTBREAK 2003

• Severe acute respiratory syndrome (SARS), which started in China and killed almost 800 people  across the world.
• International Air Transport Association (IATA) estimated that world GDP suffered a 1% hit due to  the outbreak.

MARKET WINNERS AND LOSERS

• Virus outbreaks have tended to benefit pharmaceutical stocks,
• While tourism and travel-related stocks — hotels, airlines and luxury and consumer goods — tend  to get punished.

Latest Burning Issues | Free PDF

Sharing is caring!