Coronavirus- The economic impact

The coronavirus, which has been currently affecting over 80.000 people in 37 countries, is actually damaging more the economy than the health of the world.
The first aspect that shows the criticism of the situation is the Stock Exchange: the NYSE declined by 3% and Paris, London and Frankfurt have recorded a decrease of 2%. Moreover, traders are really worried about the potential spread of the coronavirus in the USA.
The effects of the disease are already really significant for a lot of sectors: from airline companies to the tourism sector, up to all the companies that used to have any kind of relationship with China (buying, selling…).
The main damages that China has registered involve the car industry, the supply chain but most of all the airline companies (more than 200.000 flights from and to China have been cancelled).
As for this sector we might talk about a global issue: all flights from and to Dubai have been suspended and Hong Kong’s airline is having a bad time.
In order to predict the possible economic effects of the coronavirus, a comparison with the SARS (another virus that emerged in China in 2002) has

been made but with poor results. The reason is that the power of China in the global economy has increased enormously since 2002 and the interconnection with other countries is the reason why this time the virus is representing a global crisis. This strong connection between China and the countries around the world also represents the biggest question about the future:

will companies still want to rely exclusively on China after the virus will be eradicated?
Right now the Chinese government should concentrate on reducing the current problems by operating in two areas: the demand and the supply. The first one is important to convince consumers to continue buying by reducing taxes or decreasing interest rates. But the most important aspect is the second one: companies, unlike consumers, will surely still have their expenses (staff, rent…) but they are not sure they will get incomes so they need to be supported by short-term lending.

The worst-case scenario would be a global recession that currently is likely to happen. However, there is a big problem about the connection between the attempts to restrict the virus and the efforts to save the global economy. The best solution would be investing in the direct costs connected with the illness rather than striving to stop the virus by freezing economic relationships.

Maddalena Marconi 5F

Condividi:

Share on facebook
Share on twitter
Share on linkedin
Share on whatsapp
Share on email

Altri articoli