Panic contagion more dangerous than virus
Fallout: if China doesn’t contain the outbreak timeously, a global recession will hurt us badly
In the growing speculation of what China’s 2019 novel coronavirus (2019-nCoV) outbreak will do to the world economy, an economist at Goldman Sachs summed up the threat in one pithy line.
"Just because you missed dinner out or a haircut in the first quarter, you wouldn’t necessarily get more of those in the second quarter,"
Andrew Tilton, the bank’s Asia economist, told the Financial Times. "There is some lost output."
No kidding. The bank estimates that lost output would knock between 0.1 and 0.2 percentage points off global GDP in 2020. If China doesn’t contain the outbreak timeously, the FT warns, you can expect that figure to reach north of 0.3 percentage points. The outbreak is another hit to China’s GDP growth rate which slowed to 6% last year (from 6.6% previously) after the bruising trade war with the US.
Never mind if the virus sneaks past officials at OR Tambo International Airport: a global recession — which looks increasingly likely — will hurt us badly.
Comparisons may be odious but in the case of severe acute respiratory syndrome (SARS) vs 2019-nCoV, they serve as a projection of just how ugly things can get when one of the world’s two largest economies gets hammered.
When SARS — also a coronavirus — began its rampage in 2002, China’s economic output was about $1.7-trillion. Today, China is Supply Chain Inc — a $14.1-trillion behemoth whose economy has evolved from churning out cheap clothes and toys to hi-tech production lines for the likes of Apple and General Motors.
SARS killed 800 people in 17 countries.
So far, the coronavirus seems less deadly — 20,900 people have been infected, of whom 427 have died.
The contagion known as panic is more dangerous as it batters stock markets in Asia as companies such as Apple close their factories and stores in China.
Major airlines have now stopped or heavily curtailed flights to China. However, a test booking shows that you can still fly to Beijing on SAA thanks to its code-share with Air China. Happy travels!