NOVEL CORONAVIRUS – ECONOMY IMPACT

Prof. S. Thilak, Assistant Professor, SIMS

 

In recent days we all hear and fear of that one word– Novel Coronavirus which has been originated from Wuhan, China during December 2019. This deathly disease has spread beyond Wuhan to Beijing, Shanghai, and other parts of country such as Thailand, Japan, Singapore, South Korea even some cases were found in France, Germany and United States. Now recently some cases have been identified in India and they have been isolated for treatment.

 

Does the Economic Impact of Coronavirus could be bigger than SARS 2003?

            Due to SARS outbreak in 2003 the China’s GDP has been jumped 2 percentage points from the Q1 to the Q2 in 2003. Based on Nomura, the assumption of actual GDP growth in 2020 has dropped from 6% pace which has achieved in Q4 in 2019. Which is higher than the 2 percentage points which happened during SARS outbreak in 2003. This is because of temporary shock wave of coronavirus both demand and supply leave a long-lasting impact.

            The range of current slowdown and time to recovery can be determined only by controlling this deadly coronavirus will remain same.

 

Travel plunges and Services froze

            Especially during the festive season Lunar New Year Holiday people used to travel to their home country, but presently China has now slowdown their travel plunges and services has been frozen , due to this huge out break people have been halted in their places . Travel Plunges were 28.8% when compared to the past. To be specific travel plunges were 41.6% in civil travel, 41.5% in rail travel & 25% in Road transport. In addition to this almost travel restrictions were around 20 cities.

To conclude the overall Capital Economic Impact compared to the SARS break-out in 2003 was lowered by 3 percentage points in a quarter and presently the overall economy has been  slowdown to  8%. Today, whatever happens to China’s economy it will have a larger effect on the rest of the world. The virus’ spreading has come to a fear of a global economic slowdown.