Analyze the economic significance the second microorganism of the sitmulus
Answers
Answer:
The coronavirus that is currently spreading in China and beyond its borders, has financial markets rattled. Experience with virus outbreaks in the past shows that markets often bounce back quickly
The economic impact on China hinges on the ability of the Chinese government to contain the virus and its policy actions to mitigate the impact
Even if the virus outbreak turns out be comparable to SARS, its global economic effects are likely to be larger than in 2002/2003, as China has a much bigger share in the global economy nowadays. Moreover, economies are much more interlinked than 17 years ago
With global economic growth already in a deceleration phase, the virus is another risk that supports our view that we will see global recession this year and that central banks in developed markets will probably have more work to do in terms of stimulus
At this point, we don’t expect any permanent damage of the epidemic to the Chinese economy or other regions across the globe. In the past, economies have shown to make up for temporary losses after the dust had settled
Although the current crisis could make it even harder for China to live up to its recent pledge to crank up US imports of goods and services by USD 200bn goods over the next two years, we don’t foresee an additional negative effect on US-China trade relations as the Phase One deal clearly mentions exemptions in case of a natural disaster
However, in case of a further spread of the virus globally or in case of defaults among China’s highly indebted non-financial corporates due to the containment measures, the risk of permanent damage increases significantly
For The Netherlands the effects will likely be indirect, via global growth, trade and sentiment. However, specific sectors supplying marine equipment, machinery and chemicals to Wuhan could also be hit
In this Special, we look at the potential economic impact of the coronavirus that has been plaguing China since late 2019.
What do we know about the 2019 coronavirus?
The 2019 coronavirus started in the city of Wuhan (Hubei province) and belongs to the same group of viruses as SARS and MERS.[1] In most cases these viruses lead to relatively mild symptoms such as fever, coughing and shortness of breath (according to the World Health Organization). Because SARS has plagued China before (in late 2002 and 2003), it seems natural to compare the situation then to now. Before we do that, however, we should emphasize that there could be important differences between SARS and the 2019 coronavirus (Table 1), as we are still in the early stage of recognition.
First, based on the current data, the 2019 coronavirus seems to be less deadly than SARS. Where SARS had a mortality rate (number of deaths per number of affected people) of 10%, the 2019 coronavirus’ most recent numbers indicate a significantly lower mortality rate.
Second, although it is not clear yet whether the 2019 coronavirus is more contagious than SARS (they both are assumed to spread through the air), it does seem to be spreading faster than SARS. The 2002/2003 SARS outbreak led to a total of about 8000 effected cases over a course of 8 months, where the 2019 coronavirus has almost that number in a couple of weeks.