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Coronavirus effects China economy

Coronavirus Set to Deeply Affect China’s Economy

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Coronavirus, a virus originating in China which has already killed 1,770 people has shaken up the markets. Not only the virus has infected 64,437 people worldwide, but it has hindered the world’s markets. 

Not only has the epidemic strongly affected the markets of Beijing and Hong Kong, but it has also had an international impact, especially in the manufacturing and medical industries. 

As a result, local indexes have dropped. On 17 February, Japanese Nikkei took a dip of -1.4% and the Singapore STI fell 0.49%. Nonetheless, China has announced that 700 US imported products will be eligible for tariff exemption starting 2 March, which might reduce the tension between Washington and Beijing.

 

Asian markets are weakened

Chinese pandemic coronavirus – also called COVID-19 not only has weakened Asia’s stability, but it has also weakened Asian markets. On Monday, 17 February, Sydney’s S&P ASX/200 XJO was down 0.16%, South Korea’s Kospi lost 1.48% and Hang Seng was down 1.45%

According to Le Figaro: “Shanghai closed on Monday, February 10th with a fall of 7.72% while Shenzhen plunged 8.41%, its biggest drop since the stock market crash of summer 2015.”

With more than 1,770 casualties and 42,366 people infected on its territory, China is undergoing an unprecedented health embargo. Not only can the Chinese no longer travel, but the airlines can no longer land there. As a result, tourism is expected to drop between 25% to 30% for Q1.

In addition, smartphone production is expected to drop 30% in the first quarter. All in all, this is the deepest economic fall the country has experienced since SARS in 2003, according to MSNBC. A few days ago, the World Mobile Congress, the biggest smartphone summit announced it would cancel this year’s edition due to COVID-19.

In Hong Kong, the virus adds to the crisis

The biggest collateral damage in the region is undoubtedly Hong Kong. Already weakened by the political crisis of pro and anti-Beijing for almost all last year, the coronavirus adds a new layer of uncertainty.

As a result, the Hong Kong index dropped 1.54% on February 17th and remains down from the last quarter. In total, Hong Kong could lose nearly $4.2 billion due to the coronavirus.

Read on Alvexo: “Tech Revolution Blamed for Global Inequalities”

Europe is careful, too

In Europe, some countries are more wary than others. In the United Kingdom, the government has declared a “major health emergency”.

As for Germany, it could incur the old continent’s heaviest losses with more than a billion dollars, according to French paper Usine Nouvelle.

“The coronavirus epidemic has been paralyzing production chains and the exchange of goods and services. It could cost up to $330 million to France for each disrupted week”, explained a specialist in Usine Nouvelle’s story. Also, Chinese tourists have become the largest travelling population in the country, which could impact many industries in many cities, especially Paris.

While China remains the factory of the world, coronavirus could well reduce world GDP by -0.1%, according to the first estimates by specialists.

 

Note: The opinions expressed in this article are the author's own and do not necessarily reflect the view of Alvexo on the matter.