China is in the midst of a major biological crisis. A deadly virus has taken grip of the world’s second-largest economy and the most populous country on the planet. It’s a serious health concern that the World Health Organisation (WHO) has officially labeled an emergency. It will, inevitably, have economic consequences, but how severe and how far-reaching will they be?
What’s going on?
Well, in case you didn’t know, China is struggling to contain a new virus that has already killed more than 20 people and infected thousands more.
Economists famously don’t like making predictions at such an early stage. But it is possible to compare this outbreak with the economic damage done by similar episodes in the past, especially the 2002/3 SARS virus, which also broke out in China.
What economic impact could Coronavirus have?
The loss of human life is always of utmost importance. However, an outbreak like this can also have devastating economic effects. Here are a few local and global economic areas that are most likely to be affected by this latest outbreak:
Consumer spending on entertainment and gifts in the affected parts of the country will likely bear the brunt, as many will be reluctant to take part in activities outside the home that could lead to exposure to the virus. This is a pretty big deal for businesses when you consider that a Chinese New Year has just begun with many people taking holiday around this time.
Wuhan, the city that first declared an outbreak of the virus, is a major transport hub. Fears around the Coronavirus could impact leisure travel as well as transportation for business. Industrial supply chains will be affected, for sure. Some deliveries may be disrupted, and others will simply become more expensive…maybe prohibitively so.
The cost of treating those infected must be considered, especially if the virus breaks out on a global scale. The cost and length of recovery will also depend on the infected/death ratio. Luckily, the death rate currently remains pretty low, with most of the infected making a full recovery. There have already been tragic exceptions, however.
This story will unfold over the coming days and weeks. Keep an eye on the news for developments.
All the other important stuff coming up this week
Trading is all about accessing quality information. Good traders chomp up as much of this tasty stuff as they can get their hands on, but the juiciest stuff isn’t always so easy to find. To save you time and hassle, we’ve gathered up the most important stuff that will be coming up this week.
● On Tuesday, we’ll have a glance at the US’ Nondefense Capital Goods Orders ex Aircraft (Dec) (USD).
● Wednesday brings us the Australian Consumer Price Index (QoQ) (Q4) (AUD) release by the RBA; as well as the Fed’s Interest Rate Decision (USD).
● Thursday is GBP-galore, with a whole raft of releases from the Bank of England (GBP); we’ll also get a look at the US’ preliminary Gross Domestic Product Annualised (Q4) (USD).
● Friday is the final Brexit deadline (GBP), but that’s pretty much a formality now (surely?!). That aside, the EU will announce its Q4 Consumer Price Index (YoY + QoQ), and its Q4 GDP (YoY + QoQ) (EUR).
The Contentworks team