The Wuhan coronavirus continues to spread across China and other countries around the world, triggering fears about how the medical emergency will take a toll on the Chinese and global economy.
How Novel Virus could Impact Economic Growth
In an op-ed for Forbes by market expert, author, and professor of business strategy and entrepreneurship at Babson College, Peter Cohan, it was noted that experts have started estimating the economic costs brought about by the new coronavirus.
Among those who provided estimates was professor of economics at Australian National University Warwick McKibbin. Based on China's global economic share since 2003, McKibbin projected that the coronavirus crisis could slash global economic growth by as much as $160 billion.
Is the World Overreacting to the 2019-nCoV?
MIT professor Richard C. Larson pointed out in a recent interview that while medical costs are rising due to the coronavirus, the seeming overreaction of the world to the novel virus may be more damaging economically than what is seen on the surface.
In the interview, Larson pointed out that "the current hysteria in some domains are over-responses." He was referring to the decision of some countries to close borders with China and the cancelation of supposed flight routes to the country.
Larson further noted that he believes it may be too early to create a specific model that will project just how big the impact of the coronavirus will be on the economy, especially since most coronavirus strains usually have a pattern of peaking then declining in terms of infections.
Lessons Learned from the SARS Crisis
While some experts think it is not yet time to predict the effect of the Wuhan coronavirus to the global economy, others are basing their projections on the SARS crisis back in 2003 that hit domestic trade in China.
According to Deutsche Welle, the situation is much more different this time, especially since China has a bigger share in the global economy, compared to its share 17 years earlier.
For economic expert at ifo Institute Timo Wollmershäuser, the economic costs of this year's coronavirus crisis will most likely be "greater" than what the global economy experienced when the SARS outbreak kicked in.
Chinese Economy Feels the Heat
So far, only the Chinese economy has started feeling the costs of the Wuhan coronavirus. The origin city in Hubei province has been in lockdown for over a week now and other neighboring towns are reeling from the disruption in business circles.
While factories and stores initially closed for the Lunar New Year, many have extended the break due to fears of the coronavirus spreading during operations.
Among those that were hit hard by consumers choosing to stay home and isolate themselves for fear of contracting the disease are the travel industry, entertainment sectors, and other service-related segments.
As a result of the hit on Chinese businesses, some banks and financial groups have already slashed their forecasts of the Chinese economy's growth for the first quarter of 2020, CNBC reported.
Citigroup economists trimmed their initial forecast from 5.8 percent to 5.5 percent. ANZ economists, on the other hand, made a bigger cut, from 5.9 percent to 5.0 percent. A similar pattern was provided by the Economist Intelligence Unit (EIU) as it downgraded from 5.9 percent to 4.9-5.4 percent.
Mizuho and Macquarie were both more pragmatic as they only trimmed their estimates from 5.9 percent to 5.6 percent. Natixis also downgraded from 5.7 to 5.5 percent, and UBS slashed its projection from 6 percent to 5.5 percent.
Despite darker projections, two groups in particular maintained their predictions of China's economic growth" Vanguard Asia Pacific and Moody's Investors Service.
Quick Facts on Wuhan Coronavirus
So far, there have been 490 deaths in China, one death in the Philippines, and one in Hong Kong. There are 24,324 people known to have been infected with the novel virus.
It remains to be seen whether the new coronavirus will have a bigger, much more devastating impact on the Chinese and global economies.
