The economic impact of the new coronavirus outbreak has become increasingly apparent globally, with supply chain disruptions frightening global markets, and Asian governments reducing growth prospects. The IMF revised down China ’s economic growth forecast to 5.6% this year, and revised down the global economic growth forecast this year by 0.1 percentage. IMF President Kristalina Georgieva called for global cooperation to contain the epidemic and its impact on the economy.
Impact on industry
Falling oil demand/ Gold price increase
China is the world's largest oil importer. As the coronavirus hits manufacturing and travel industry, the International Energy Agency (IEA) predicts that global oil demand will fall for the first time in a decade. Coronavirus spread to various regions in Europe and Asia, market tensions impacted the global economy, uncertainty and fear caused the demand for safe-haven assets such as gold. Gold price reached toward the $1689.
Impact on the countries
Since the outbreak, the Chinese government is working to reduce the negative impact of the epidemic on the economy through crisis management measures, liquidity supply, fiscal measures and financial support. But before the epidemic is contained, the economic impact will certainly not get away in a short time. Quarantined the province, mining, tourism, construction and retail, has also been influence so hard.
Japan is one of the countries with the worst outbreaks outside China. As China's virus outbreak damages exports, output and consumption through a sharp reduction in overseas tourists. Japanese automakers such as Toyota and Nissan have been restricted by Chinese factories, causing delivery problems that affect domestic production. The Japanese economy's increase in sales tax last year caused damage to consumption, and new epidemics has also caused the Japanese economy to take another hit again in this quarter. The tourism industry is also affected by the domestic epidemic situation, and the number of overseas tourists has sharply decreased, affecting the Cherry Blossom Festival in March, and this year's Olympics may be affected. The Bank of Japan also said it would support the economy by maintaining its massive stimulus plan.
The crisis is likely to lead to major adjustments in US-China business relations. Jo4China ’s epidemic has damaged the entire global supply chain, factory shutdowns have affected shipments, and corporate profits have been significantly harmed, it causes the slowing global economic growth. From the current point of view, the global epidemic has not seen obvious suppression, and the drug has not yet appeared. Therefore, the US stock market has been indirectly affected. Without the apparent control of the epidemic, the US Federal Reserve may cut interest rates next month.
The outbreak highlights the importance of China to the current global economy. Be wary of companies not putting too many manufacturing projects in China or relying too much on the Chinese consumer market. The risk of over-reliance on a single country makes each country's future economic and industrial layout more cautious and realize how important it is to have a diverse supply chain. Diversification is an important concept. To diversify investment risks, the crisis is to turn around and build diversified assets, and avoid industries directly affected by Coronavirus.
Wish Virus away as soon as possible. God bless we all!