Economic activity showed the first symptoms of infection of the coronavirus, causing more than 2,200 deaths, a month ago, but it was this week when it has been enshrined as a risk to the global economy. A handful of leading companies have confirmed a decrease in their accounts, sectors such as air have calculated the real cost of the impact and the first countries have announced measures to curb contagion to economic activity.
The International Monetary Fund warned this week that the epidemic is the "most pressing risk" for the economy, capable of derailing the recovery. Days before he had announced that global GDP would grow by 2020 two tenths less due to the coronavirus.
Stefan Scheurer, an analyst at Allianz Global Investors, recalls that "the current consensus estimates that the world economy will only be affected in the short term", but considers it "too optimistic" and adds: "It is expected that other measures of relaxation of monetary policy, not only in China but in other countries, especially emerging Asian markets. ”
The Chinese Central Bank announced this week a new package of stimulus measures. The supervisor is committed to keeping the country's currency (the yuan) stable and will offer favorable interest rates (3.15% in the medium term) on loans for companies committed to fighting the epidemic.
Although the country's Central Bank said the impact on the economy of the Asian giant will be small, analysts discount at least one percentage point of growth to China in the first quarter. Mark Haefele, global head of investments at UBS, indicates that “for the whole year, the impact on growth can be limited and go from 6.1% in 2019 to 5.6% this year”.
Although around 99% of infections are concentrated in China, there are already countries in Europe that are promoting stimulus packages. France announced yesterday that it is preparing support measures for the affected companies after recognizing that the coronavirus will discount a tenth of growth to the French GDP in 2020. The Minister of Economy, Bruno Le Marie, explained that the Government will extend the payment deadlines to support the Business.
In addition, Le Maire added that he works with legal services so that in “certain specific cases” the “force majeure” mechanism can be used, which exempts a company from fulfilling its contractual obligations.
The return to work on account of drops of Chinese citizens after the New Year holidays begins to impact the supply chain of many companies that depend on the Asian country. Foxconn, the world's largest Iphone provider, assumed "negative effects" on its results without giving further details. Apple itself said two days before it will not meet its revenue targets. Cupertino's firm keeps many of its stores closed or with reduced hours in a market that reported 20% of its revenues last quarter.
Fitch says in a report that the outbreak "poses a risk" to "all" the powerful US technology sector, whose supply chains "are very dependent on China and suppliers in the Asian country are not yet operating at full capacity." . The power cuts also hit Japanese manufacturers Honda and Nissan this week, which yesterday delayed the reopening of some factories in China until mid-March.
Adidas and Puma also join the list of affected companies. The first acknowledged that its business in China has plummeted 85% year-on-year since the Chinese New Year. In that country Adidas accumulated 20% of its sales in 2018. For its part, Norwegian Cruise Lines canceled its trips to Asia and recognized a blow to its profit and loss account, just like Air France-KLM, which confirmed a hole of between 150 and 200 million in its operating profit.
Precisely, the airlines were the first to quarantine by canceling their routes to China and to fit falls on the stock market on January 20, when authorities confirmed that the virus was transmissible between people. The losses in the air sector will be more than 25,000 million euros, as recognized on Thursday by the International Air Transport Association (IATA). In addition, IATA reversed its positive forecasts for global demand: it expects it to contract 0.6%, far from the 4.1% increase in global traffic it anticipated by 2020 a few months ago.
International advance
In recent days the number of infected in Hubei, the Chinese province epicenter of the outbreak, has fallen. The outbreak threatens to enter a new phase, outside of China. South Korea quarantined the population of the country's fourth city, Daegu, after detecting a very active focus in that town. The number of positive cases has multiplied by five in just three days.
Japan also saw how the number of infections grew strongly and Italy yesterday confirmed six cases in the Lombardy region that constitute the first local transmission in the transalpine country.
Two thirds of cases exported from China have not been detected
- Two thirds of cases exported from mainland China have gone unnoticed and leave human to human sources of transmission uncontrolled, says a study by Imperial College London.
- The study has taken air travel data and analyzed information from eight countries. They concluded that 156 cases had been declared compared with a range of 426 to 577 cases that should have been diagnosed.
