Coronavirus, A Threat To World Economy Stability
Will The World Economy Crumble Because Of Coronavirus?
People the world over are keenly following up on the news of the coronavirus outbreak. The majority of people affected by the virus are in the Wuhan region in China. This confinement, however, has multiple effects on what is happening to the global economy. Many experts have now come out to voice their opinion on this pressing matter that is becoming major economic news.
What Is The Coronavirus?
The coronavirus is a group of viruses that primarily affect animals. However, these viruses can evolve and start affecting human beings. While the world still comes to terms with the outbreak, experts are drawing comparisons with previous ones. The disease in question here is the SARS outbreak of 2002-2003. Experts are referring to the coronavirus as ‘less severe but more infectious’ than SARS.
Less Deadly, But More Infectious
A professor of global health and director of the London School of Hygiene and Tropical Medicine, Peter Piot offers more insight. He opines that the mortality rate of the coronavirus is by all indications lower than that of SARS. While the SARS outbreak recorded 774 deaths among 8,098 infections, this is lower for the coronavirus. So far, the reported cases are 4,515 and 106 deaths. This is roughly a 1% or 2% mortality rate. SARS stood at roughly a 10% mortality rate.
While a 1% or 2% mortality rate may seem manageable and less deadly, but if the infections increase the dynamic changes. If the virus-infected one million people, at that mortality rate, the deaths would be 10,000 or 20,000 people. The WHO is yet to term this a global health emergency but has done so in China.
But, what are economy news analysts saying about the virus and the world economy? Most of the opinions of the analysts come from analyzing the 2003 SARS outbreak. In that year, there was a general slump in the global markets. The SARS outbreak contributed significantly to this, and many economic experts fear the same now.
Will the World Economy Take A Hit?
While some stocks showed a huge decline after the announcement of the SARS outbreak, its containment changed things. The S&P 500 saw a 10% decline in the period between January and mid-March 2003. After the containment of the virus, fortunes changed. That year, the S&P 500 closed the year at more than 26% higher.
While we may not compare 2003 to the 2020 economic outlook, we should not forget what it was like back then. 2003 is the same year that the US invaded Iraq, an event that would affect global markets. Additionally, there had been a decade long bull market that stocks were recovering from at the time. The tech bubble had also affected the stock market as well, and the value of stocks.
The stocks on Monday saw some rapid decline. The Dow Jones industrial average was one of the worst-hit. It recorded its worst one-day drop since October 2018. This drop effectively wiped away the gains made since the year started.
Is This A Global Health Emergency?
Peter Piot remarks that the difference between 2003 and 2020 is transparency. He goes ahead to explain that China is open about the number of infections and deaths. Back in 2003, that level of transparency was not present, and therefore the world economy faced a lot of uncertainty.
The pressure is now mounting on the WHO to declare this a global health emergency. This call is coming after Germany, France, the USA, Thailand, Vietnam, and Australia reported cases of the virus. Many health and economic experts are confident such a declaration will help trigger a political reaction worldwide.
