COVID-19 may have little impact on world economy

World Health Organization (WHO) mission director Bruce Aylward, who headed up an international expert mission to China, told reporters in Geneva that other countries were not at all prepared to rein in the Coronavirus outbreak as it is causing more death and disruption, spreading over to new countries.

The International Monetary Fund (IMF) has warned the situation does not augur well for the global economic growth that was already under pressure from a global trade war and Brexit. Though the number of fresh Coronavirus cases declines in China, there has been a sudden increase in parts of Asia, Europe, and the Middle East. Entire towns and cities in different parts of the world have been sealed off in an attempt to stop the infection, while hotels in different countries have been placed under lockdown because of suspected cases. The world stock markets have tumbled, oil prices have gone down and restrictions imposed on travelers including Pakistan while sporting events canceled due to disruption caused by the epidemic.

The trade across the countries has been badly affected as long queues of vehicles have been witnessed on the borders while traders fear heavy losses due to perishable items.  Saudi Aramco Chief Executive Amin Nasser in a statement said oil prices have fallen this year and the demand has been hit due to rapid spread of the Coronavirus in China, the world’s largest energy consumer. He said they expect the Coronavirus impact on oil demand to be short-lived and for consumption to rise in the second half of the year, especially from China. Gulf countries announced new measures including suspension of passenger and cargo flights to Iran in an attempt to stop the spread as the latter has emerged as a major hotspot.

Top health officials in the US have warned Americans to brace for the "inevitable" spread of the Coronavirus disease that has threatened the world causing the relocation of hefty budgetary resources to counter the epidemic.

The International Air Transport Association has warned of a significant decrease in earnings among global carriers due to the collapse of travel in Asia because of the Coronavirus. It is feared that a large number of sectors including airlines, automakers and more are under threat due to disruption of China’s manufacturing network, and the slowdown of its economy. As the Coronavirus outbreak rattles the global economy and disrupts supply chains, international companies across nearly every industry are faced with a stark reality: “Business will not go on as usual".

International Monetary Fund head Kristalina Georgieva in a blog post published on the IMF’s website said the new Coronavirus outbreak is the “most pressing uncertainty” facing the world economy right now. “It is a stark reminder of how a fragile recovery could be threatened by unforeseen events,” she added. The virus has already slowed China’s economic growth this year, Georgieva said, just how much depends on efforts by world leaders to contain the fast-spreading outbreak. “If the disruptions from the virus end quickly, we expect the Chinese economy to bounce back soon,” she wrote, adding that China’s GDP growth would drop sharply in the first quarter of 2020, it would be a minor hit on the year. “Spillovers to other countries would remain relatively minor and short-lived, mostly through temporary supply chain disruptions, tourism, and travel.

The Director-General of the World Health Organization (WHO) Tedros Adhanom Ghebreyesus, in a recent press conference, said people should be cautious of misinformation and conspiracy theories about COVID-19.  The outbreak of the new Coronavirus in the central Chinese city of Wuhan is a recent phenomenon where China has shown its maturity. The Chinese leadership is a visionary and knows the consequences of the outbreak, he said. However, the rising cost of the Coronavirus outbreak for business and the world economy is expected to become clearer next week as major firms issue trading updates and reports the toll on the manufacturing sector.

China’s President Xi Jinping had already warned that the Coronavirus would have a “relatively big impact on the economy and society”. However, he had stated that it would be short-term and controllable, adding the government would step up efforts to cushion the blow.

(By APD writer Hussain)