A deadly illness from corona virus COVID19 has reminded us how interconnected and globalized we are today. COVID 19 which originated from mainland china in the province of Wuhan has been declared by WHO as a potential pandemic. Despite its origin it has affected citizens of 28 other countries and with the spread of the virus it is getting tougher to contain the spread.
Social media has played a major role in accelerating the speed at which news (as well as misinformation) is moving around the world. On February 2, the World Health Organization (WHO) called the new coronavirus “a massive ‘infodemic,’” referring to “an overabundance of information—some accurate and some not—that makes it hard for people to find trustworthy sources and reliable guidance when they need it.” Previous viral outbreaks such as SARS, MERS, and Zika caused global panic but because of today’s social media, fear is amplified.
The health risk it is posing is undoubtedly overwhelming but another issue that is emerging cannot be undermined. The effect that this outbreak has had on global markets and trade flows is significant.
After a bruising year for China due to its trade wars with US, coronavirus has stop Chinas economic growth and its GDP is at 4.5% retardation which is the slowest pace. It has been estimated that 42% of China’s economy will be affected. The rise in the bad debts of companies has reached $1.1 trillion while china air is will be facing a loss of $12.8 billion. There is a $29 billion loss that has been reported by IATA.
Countries in South Pacific region, which lately became the region of most investment by china, are now under economic crisis due to their reliance on Chinese investments. Cambodia, whose economy is under great influence of Beijing, is going through one such crisis and uncontrollable inflation rates.
The scope of economic crisis is not just limited to these extend rather global due to heavy contribution of China in global market and different sectors.
The United States is certainly not immune. When presenting the semi-annual Monetary Policy Report to the U.S. Congress last week, Fed Chair Jerome Powell cited the coronavirus as one of the risks to the economic outlook. He stated, “In particular, we are closely monitoring the emergence of the coronavirus, which could lead to disruptions in China that spill over to the rest of the global economy.” We can see the potential avenues for disruption when looking at the geographic revenue exposure of the MSCI USA index. This index has 38% of its revenue coming from the rest of the world with China as the second highest revenue exposure overall at 5.7%.
Europe will also be impacted. While Brexit has been a key issue for the United Kingdom and the European Union (EU), it is China that dominates revenue exposure for the UK, after domestic- and U.S.-based revenue. As shown below, only two EU countries crack the top eight (Germany and France) and their combined 6.2% exposure is less than China’s 8%.
One of the major emerging crises is the shortage of medicine, due to the reduction in the number of working industries there has been a considerable shortage in the production of drugs in India which is facing the current corona outbreak. It has been estimated that this shortage would increase by time giving a tougher time for the medical facilities to handle the growing number of affected population.