Corona-virus: A global economy disaster !!?
Analysis by Twin Philemon. 10:33 hrs E.A.T
China is the world’s second economy with an estimated GDP annual growth rate of 6.1% in 2019, its lowest rate in over 30 years. Amid trade pressure from the US and sluggish demand from home and abroad, the phase one trade deal with US is or “was” expected to bring back calm to the ever growing Chinese economy.
China is the world’s second economy with an estimated GDP annual growth rate of 6.1% in 2019, its lowest rate in over 30 years. Amid trade pressure from the US and sluggish demand from home and abroad, the phase one trade deal with US is or “was” expected to bring back calm to the ever growing Chinese economy.
In the wake of the new decade, the novel coronavirus has stood up to be the greatest challenge to the economy of not only china but the entire globe. The outbreak in the business district of Wuhan has led to death of about 1100 lives and WHO has also issued a global health emergency.
In a bid to combat the spread of the disease, China has put Wuhan under complete lock down quarantining over 11 million people, cutting off transport links and closing off facilities such as cafes and cinemas. This however might not be the case in other chinese cities like Beijing or Shanghai, the safety precautions taken such as the extension of the Lunar year holidays have affected them.
People are yet to return to work next monday after entire cities and business sectors were shut down for more than two weeks in efforts to contain the outbreak. This has created majorly a supply chain disruption as many companies always look up to china for majority of their components.
The Automotives industry could be the first to face this blow. That is because of the massive size of the Chinese auto parts industry and the fact that you can’t build a car with only 99% of its parts.
“It only takes one missing part to stop a line,” said Mike Dunne, a consultant to the auto industry in Asia and the former head of GM’s operations in Indonesia.
Major airlines have all suspended their trips to china till further notice cutting off the free movements of especially business men and traders to enter and exit china. This could lead to spill over as there will be shortages in their home countries.
Some airlines calling upon their staff and cabin crews to take unpaid voluntary leave as a way to curb and minimise expenses. This forces the employees to withdraw from their savings so as to be able to meet their day to date expenses during the leave periods.
Though stock and financial analysts insist that there will be a minimal impact on the economy, the Shanghai Composite index closed nearly 8% lower, its biggest daily drop for more than four years when it re-opened on monday last week.
Previous outbreaks majorly the SARS in 2003 did have little minimal impact on the global economy though back then china controlled just 4% of the world’s GDP compared to the 16% it holds now.
The chinese are doing whatever it takes to handle the outbreak with the president Xi on the fore front of the fight.
However there might be more to affect the global economy in 2020 headlined by the final exit of Britain from the EU and the US also takes to polls late this year.
In a bid to combat the spread of the disease, China has put Wuhan under complete lock down quarantining over 11 million people, cutting off transport links and closing off facilities such as cafes and cinemas. This however might not be the case in other chinese cities like Beijing or Shanghai, the safety precautions taken such as the extension of the Lunar year holidays have affected them.
People are yet to return to work next monday after entire cities and business sectors were shut down for more than two weeks in efforts to contain the outbreak. This has created majorly a supply chain disruption as many companies always look up to china for majority of their components.
The Automotives industry could be the first to face this blow. That is because of the massive size of the Chinese auto parts industry and the fact that you can’t build a car with only 99% of its parts.
“It only takes one missing part to stop a line,” said Mike Dunne, a consultant to the auto industry in Asia and the former head of GM’s operations in Indonesia.
Major airlines have all suspended their trips to china till further notice cutting off the free movements of especially business men and traders to enter and exit china. This could lead to spill over as there will be shortages in their home countries.
Some airlines calling upon their staff and cabin crews to take unpaid voluntary leave as a way to curb and minimise expenses. This forces the employees to withdraw from their savings so as to be able to meet their day to date expenses during the leave periods.
Though stock and financial analysts insist that there will be a minimal impact on the economy, the Shanghai Composite index closed nearly 8% lower, its biggest daily drop for more than four years when it re-opened on monday last week.
Previous outbreaks majorly the SARS in 2003 did have little minimal impact on the global economy though back then china controlled just 4% of the world’s GDP compared to the 16% it holds now.
The chinese are doing whatever it takes to handle the outbreak with the president Xi on the fore front of the fight.
However there might be more to affect the global economy in 2020 headlined by the final exit of Britain from the EU and the US also takes to polls late this year.
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| Courtesy image: stock price graph movements |
4 Comments
This was a wonderfull insight...wish to have read it before
ReplyDeleteThis is amazing brother.i wish I new you had such capacity long before haha...kamuntu andrew
ReplyDeleteHi Andrew, Thanks for review & the hope
DeleteGreat insights
ReplyDeleteDrop any suggestion or complaints as well as your comments