The economy, another victim of the coronavirus

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The World Trade Organization (WTO) begins to worry, anticipating that international trade will continue to decline in the first quarter of the year due to the health crisis unleashed by SARS-CoV-2.

“The growth of world merchandise trade is likely to remain weak at the beginning of 2020, according to the WTO Barometer on Trade in Goods published on February 17,” the organization said on its website.

According to the entity, the situation in global trade may worsen in the context of health risks due to the new coronavirus and the speed of recovery of the international economy.
“Currently, the real-time measurement of trade trends is 95.5, less than the 96.6 recorded last November, and well below 100, which is the benchmark of the index. This result is lower the trend could be further reduced due to a new global health threat, “the statement said.

China injured but not defeated

Logically, China is the most affected, although the authorities are confident that they can reduce the impact.

China will fulfill all the social and economic tasks planned for this year despite the outbreak of the new coronavirus and its impact on the economy, said Chinese President Xi Jinping in a telephone conversation with British Prime Minister Boris Johnson.

“The Chinese economy has strong stability, domestic demand is huge and the industrial base is strong,” said Xi Jinping quoted by the Xinhua agency.

For his part, Chinese Foreign Minister Wang Yi said his country will do what it takes to make the outbreak of coronavirus affect the economy as little as possible.
“Our Government will work to minimize the effect [del coronavirus] in China’s economy, “Wang said in a statement during an official visit to Germany.
While the Chinese Foreign Minister admitted some impact of the disease on the economy, he stressed that its effect will be fleeting.

The minister predicted the acceleration of consumption and economic momentum as soon as the epidemic that so far infected more than 73,000 people and caused 1,873 deaths, mostly in the city of Wuhan, Hubei Province, the focus of the coronavirus, has been achieved.

“We are sure that we will meet all the economic and social development goals of this year and achieve the construction of the middle class and the eradication of poverty,” he said.

However, there are sectors where it shows more, such as passenger transport. The epidemic caused the cancellation of some 78,000 flights in China in less than a month, according to the State-Owned Assets Supervision and Administration Commission (SASAC).

“From January 20 to February 13, there were 78,000 flight cancellations and 13 million ticket returns on three airlines,” Re Hongbin, vice president of SASAC, told a news conference.

The official added that “the daily occupancy rate was reduced by almost half.”

The economic impact, according to Re, was even more sensitive because it was the lunar New Year holiday, the high season for China’s aviation industry.
To contain the epidemic, the Chinese authorities quarantined tens of millions of inhabitants, canceled numerous events and extended the lunar New Year holidays, which affected supply chains inside and outside the country.
Today, more than 80% of the industrial capacities under control of the Chinese State are operational, revealed SASAC, whose vice president acknowledged however that some productive capacities, mainly in areas of extreme epidemiological situation, are still idle.

Russian economy vs coronavirus

Although to a greater or lesser extent the epidemic caused by the new coronavirus has been felt almost everywhere in the world, at the moment it does not threaten the development of Russia’s economy or pose risks to its stability, said the first vice president of the Russian Central Bank, Xenia Yudaeva.
“There are no serious risks to financial stability, but the situation requires extreme vigilance of the reaction in the global economy,” Yudaeva said during a meeting with bankers.
However, tourism companies have felt the stakes.

For Oleg Cherednichenko, professor at the University of Economics Plekhanov, the epidemic “is a direct blow against the tourism sector on a global scale, as one in ten tourists in the world comes from China. ”

“As for Russia, we estimate that it loses about 100 million dollars a month in revenue generated by Chinese tourists,” he told Sputnik.

The expert added that it is an evaluation of the direct blow in the tourism industry, which “does not take into account the multiplier effect on related sectors.”

The world feels the impact

Throughout the world there are complaints of the wake that the epidemic leaves.

The French Minister of Economy and Finance, Bruno Le Maire, estimated that this situation will remove at least one tenth to the increase in France’s gross domestic product this year.
Thailand, on the other hand, could lose between 0.4 and 1% of its gross domestic product (GDP) due to the reduction of tourism from China due to the spread of covid-19, as estimated by the Government Savings Bank (GSB ).
Chile has felt the impact on its fruit exports to China. The Government confirmed that the containers stranded in Chinese ports with Chilean fruit are already 2,300 due to the coronavirus crisis.

New Zealand Prime Minister Jacinda Ardern also warned that the epidemic will have a negative, albeit temporary, impact on the New Zealand economy. “While it is clear that this will have an effect in the first and second quarters of 2020, the Treasury expects economic activity to return to normal as global growth recovers and supply conditions become normal in the second half of 2020, “said Ardern.

Even the most powerful rival in China, the United States, has recognized the effects of the virus, although it is expected to be temporary. US Treasury Secretary Steven Mnuchin said he does not expect the new coronavirus to impact his country’s economy beyond 2020.

“I don’t expect the coronavirus to have an impact [en la economía] beyond this year, “the official said during a hearing before the US Senate Finance Committee.

Beyond geography

Not only countries, but complete economic sectors have accused some kind of malaise.

The outbreak of the coronavirus will have a negative impact on the automotive sector in the current year, predicted the rating agency Fitch Ratings.

“The coronavirus outbreak can cause a reduction in new car sales in China and disruptions in global supply chains, which will aggravate the problems of the automotive sector in 2020,” the agency says.

Fitch points out that the fall in the sale of new cars will be the most notable, considering that China represents the largest new car market in the world, with 30% of all global sales.
On the other hand, the price of the barrel of the basket of the Organization of Petroleum Exporting Countries (OPEC) is in a process of timid recovery after the panic caused in the markets by the health crisis unleashed by covid-19 pneumonia.

Beat the epidemic, a struggle of all

For its part, China understands the challenge and ensures that its fight against the coronavirus also seeks to minimize its impact on the global economy, according to Chinese Foreign Ministry spokesman Gen Shuang.

The representative of the Chinese Foreign Ministry recalled that “China’s GDP represents approximately 16% of world GDP, and its contribution to global economic growth has already exceeded 30%. If the Chinese economy is affected, the impact will inevitably extend to others countries and will impact the global economy. ”

“That is why China is fighting so actively against the epidemic, both for its own well-being and for the good of the whole world, and the support and assistance to China in those efforts also represents the defense of the joint interests of the community international, “he stressed.

The blow to the Chinese economy depends on the effectiveness of the measures taken to prevent and control the spread of the disease, but it is possible to “minimize the impact of the epidemic on our economy,” said the spokesman.
But in the current context, the only way to reduce the economic effects of the coronavirus is through the support of the international community, which must join forces to overcome the epidemic and restore suspended exchanges and cooperation between countries as soon as possible.

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