Coronavirus: A Wakeup Call For The Global Economy

The Chinese economy looks set for a contraction in the March quarter as activity in the manufacturing sector was reported at a record low in February. The Indian economy is already going through challenging times as the recent Q3 GDP data suggests the growth slowdown continues with a turnaround still elusive. The picture for the global economy is also bleak with talk of a recession in the US economy gaining ground.

It was from Wuhan, the sprawling capital of Central China's Hubei province, that the WHO Country Office in China got its first report that pneumonia of an unknown cause had been detected. Later, on January 30, the WHO declared the outbreak a Public Health Emergency of international concern. The coronavirus disease (COVID-19) caused by severe acute respiratory syndrome coronavirus 2 (SARS-CoV-2) and has affected over 90,000 people the world over to become a global emergency.

The epicentre of the outbreak is in China with the province of Hubei and eastern China the worst affected. The Chinese government imposed a lockdown in Wuhan and other cities in Hubei province to quarantine the epicentre of the outbreak of coronavirus disease. Economic activity and movement of people in these parts have come to a grinding halt.

There were 80,000 confirmed cases of COVID-19 in China itself, resulting in the death of nearly 3,000. More than 10,000 cases have been reported in other countries, and over 150 people have died till date. The situation is grim, and it demands a quick and coordinated effort across the world to contain its further spread.

The economic damage

Beyond the public health aspect, another crisis is looming, and that is about its broader impact on the global economy and markets. Even if the virus turns out to be less deadly than feared, the fear itself, and all the emergency control and containment measures required will be a setback for the global economy. It is now sure that the epidemic will hurt the world economy by the disruption of global supply chains.