Wuhan COVID-19 crisis
The pneumonia epidemic in Wuhan is raging in China. And the country is almost in the country. More and more countries in the world have reported the epidemic. Although it is too early to say how much the overall impact of the outbreak on businesses and consumers is. A Wuhan COVID-19 epidemic that has killed more than a hundred people is expected to hurt the Chinese economy.
According to Reuters earlier, the emergence of a COVID-19 epidemic in China has seized chills in global financial markets. Investors were involved in the 2003 African swine fever, Hong Kong demonstrations, Taiwan elections. And the Sino-US trade war crisis. British media pointed to China as Ready to meet the economic shock wave that connects the pneumonia epidemic.
Despite the unprecedented “cities closure” and other stringent quarantine measures adopted in many Chinese cities. The spread of the deadly Wuhan COVID-19 does not appear to have slowed down. It has risen to 9809 and more than 15,000 suspected cases.
“The measures taken by the US government to control the coronavirus epidemic will reduce economic growth in the short term” Bill Adams, senior economist at PNC Financial Services Group, told VOA.
The U.S.-China trade war has fallen behind, and Beijing had expected a consumption boom from the “Golden Week” of the Chinese New Year to promote a transitional economy. It seems that this desire is likely to fall through.
The Wuhan COVID-19 is a drag on economic growth
Ye Wenbin said: “Restrictions on travel, restrictions on business activities. And group activities that limit consumer spending. Coupled with the resumption of work after the manufacturing consolidation Lunar New Year, will weigh on economic growth.”
According to statistics from the Ministry of Transport of China, on January 25, the first day of the Lunar New Year. China’s railway transportation and civil aviation passenger volume fell by an average of 42% from the same period last year. And the overall traffic volume fell by 29%.
Compared to when the SARS epidemic broke out in 2003. How much is the current Chinese economy dependent on consumer spending and the service industry? This is the downside risk factor facing the Chinese economy. The Wall Street Journal reports that official data show that consumer spending accounts for slightly more than 50% of the overall Chinese economy.
Barclays estimates that China’s GDP growth in the first or second quarter may be shortened by 0.1 to 0.2 alternatives due to consumer confidence and spending activity.
In order to control the epidemic, the Chinese government has announced that the Chinese New Year holiday will be extended to February 2.In order to reduce the chance of spreading the virus when a large number of people return. Shanghai has announced that the date for resumption of business will be extended beyond February 10 and Suzhou. A manufacturing center has made a similar decision.
However, the continuous shutdown of these short-term effects. The recovery of the epidemic will affect the income of Chinese enterprises, damage consumption, and reduce industrial injection and exports in the short term.
However, some economists still believe that it is too early to see how much the emerging coronavirus epidemic will affect the Chinese economy. Gary Clyde Hufbauer told VOA that the actual impact of the epidemic on the economy will lead to the scale of the epidemic and whether. The epidemic can be effectively controlled in the short term.
China will miss its target of 6 percent annual economic growth in 2020
He said, “If you take 20,000 cases of infection as a door cloud. If the epidemic can be effectively controlled at this level. Which is the level of hundreds of daily confirmed cases, then the impact of this epidemic on the Chinese economy It will be limited, probably no more than 0.25 combined GDP. “
However, Huffbauer also warned that if the epidemic is not effectively controlled and the number of confirmed cases reaches 100,000. The epidemic will reduce China’s economic growth as an alternative. He said: “I think that the economic growth rate will drop by at least 1%, which means that China will not be able to achieve the target of 6% annual economic growth by 2020.” 2020 is the “comprehensive construction of a well-off society” and “Ten The end of the “Three Five-Year Plan” is of great significance to Beijing.
The University of Glasgow’s Virus Research Center (the University of Glasgow. Lancaster Universit. University of Glasgow Virus Research Centre, UK) and the American University of Cancer. Four infectious disease biologists tracked the outbreak. Using professional models and existing methods. It is believed that the new virus emerging in Wuhan will infect 250,000 people by February 4. At 20:00 on January 31, Beijing time. China’s cumulative number of COVID-19 pneumonia diagnoses exceeded 9,800. Exceeding the number of SARS cases in 2003.
This is a huge challenge for our small and medium-sized enterprises, especially the mold manufacturing industry
We are an injection mold company located in Shanghai. The sudden outbreak completely disrupted the company’s original resumption of work. Shanghai’s escalation of control measures and the extension of the Spring Festival holiday requires. That most companies should not resume work before 24:00 on February 9. If construction is not started, bank interest, hydropower, depreciation of plant equipment, etc. Will have to be paid, and the company will have to rigidly spend hundreds of thousands of dollars a month. And more than 80% of the current orders are for export business. After the outbreak, many foreign customers asked whether they could deliver on time. This is a huge challenge for our small and medium-sized enterprises. Especially the injection mold manufacturing industry. I hope that the epidemic will pass quickly.
U.S. stocks fell nearly 10% in a single day for the first time since 1987
Now the COVID-19 epidemic in China is gradually improving, and we are confident that it will be completely controlled by the end of April. However, COVID-19 has exploded globally. The most serious European country is Italy. At present, all countries are taking measures.
On March 11, U.S. President Trump announced that for 30 days from Friday. The United States would ban passengers from European Schengen countries other than the United Kingdom from entering the United States to combat the epidemic. In the United States, more than 1,000 confirmed cases have been widely spread in 37 states across the United States.
Another developed country, Italy, has over 12,000 confirmed cases and 827 deaths. Making it the country with the worst outbreak outside China. Italy had to extend the decision to “close the city” to the whole country.
For the economy, the impact of the epidemic itself is mainly from the isolation and blockade measures adopted by the anti-epidemic. This will block personnel exchanges on a large scale. And large-scale activities and consumer behavior will decline sharply.
US President Donald Trump announced a travel ban on March 11 and the European Central Bank stepped down, all shocking and disappointing the market. The New York Fed launched a bail-out plan of at least $ 1.22 trillion but failed to stop U.S. stocks from falling. The Cboe Volatility Index, which measures the degree of market panic. Reached a new high since the 2008 financial crisis.
Affected by this, the five largest U.S. technology giants, Amazon, Apple, Alphabet, Facebook, and Microsoft, lost $ 416.63 billion in market value overnight.
Chinese media Sina Finance reported on March 13th that Beijing stock price plummeted 9.88% on March 12, Facebook fell 9.30%, Alphabet fell 8.2%, Amazon stock price fell 7.98%. And Microsoft stock price fell 9.48% as investors continued to worry about Coronavirus transmission and its potential impact on the economy. These technology companies have been one of the biggest drivers of a rebound in the U.S. stock market. Which sent the S & P 500 index to a record high in February.
It is reported that when the U.S. stock market is highly volatile, the New York Federal Reserve announced an asset purchase plan of at least $ 1.22 trillion. Providing a three-month repurchase operation worth $ 500 billion. Plus a one-month market operation of $ 500 billion, and Complete at least $ 220 billion in operations in two weeks.
After the news of the New York Fed launching a rescue plan of at least $ 1.22 trillion. The decline in US stocks narrowed for a time. But it fell again in the afternoon, indicating a high degree of panic in the market.
UBS analysts believe that the market is restless. Because the US government has few policies in place to prevent short-term economic losses.