Why coronavirus is bad news for the global economy?

Team Veye | 03-Feb-2020 global economy

The current outbreak of novel coronavirus (2019-nCoV) was first reported from Wuhan, China, on 31 December 2019. Ever since, WHO has been tracking the spread and virulence of the virus, to provide advice to countries and individuals on measures to protect health and prevent the spread of this outbreak.

As the coronavirus outbreak continues to spread across China, a lot of early research is going on to have a clearer picture and know the key factors that will determine whether and how it can be contained.

Amidst growing concern, Health agencies worldwide and people at large are concerned about how far will this virus spread. One estimate predicts that the total number of infections in five major Chinese cities — Beijing, Shanghai, Guangzhou, Shenzhen, and Chongqing — will peak between late April and early May. As things are changing rapidly some disease transmission has already taken place beyond Chinese borders, specifically in Germany. 

China is the second-biggest economy in the world. Any fluctuation in the GDP growth rate projection in China's economy is bound to impact the global slowdown. In 2002-03, China was bogged down by SARS (Severe Acute Respiratory Syndrome) which had a higher fatality rate than the current coronavirus. Estimates suggest that the SARS outbreak impacted China's GDP growth rate by 1.1 to 2.6 percentage points. Remembering that China's and the world's economy was less interconnected and interdependent on one another back in 2002-03, the effect could be more devastating this time for the global economy.

The coronavirus outbreak has aggravated the worries of global economists. It is estimated that the coronavirus outbreak may impact China's economic growth by up to 1 percent. According to ADB, the SARS outbreak of 2002-03 had caused a loss of $18 billion. 


The impact of the coronavirus outbreak is already being felt across the globe. All the sectors and stock exchanges around the world are feeling the impact


Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing this report. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.

veye logo

Grab Your Free Report On 5 ASX Dividend Stocks To Buy In 2024