Coronavirus and the World Economy
The possible economic consequences of the coronavirus — now called Covid-19 is a concern for everyone around the world. Here are different comments from a variety of organizations.
There hasn't been a sharp increase in newly confirmed Covid-19 cases outside of China as of Thursday February 13, according to World Health Organization cited by The Financial Times. The WHO says “data on the cases should be interpreted with extreme caution as the outbreak could still go in any direction."
1. Minimal stock market impact so far
Liz Ann Sonders, Chief Investment Strategist – Charles Schwab
“So far, there is minimal market impact – with the economic impact yet to be quantified. I think the market is looking past the impact, while also taking comfort in the notion that the Fed could step in if the economic impact has more than a quick first quarter impact on the U.S.”
2. China’s new method for calculating data on the spread of the virus makes it impossible to accurately predict the economic impact to that country.
Nocholas Lardy, Senior Fellow - Peterson Institute for International Economics
“We don’t know how or with what to compare the new data. Whatever assessments were made on the previous data, now your range of error is higher and whatever your assessment, you should prepare for the downside of that.”
3. More than 90% of generic drugs in the U.S. come from China, so the pharmaceutical industry is significantly vulnerable to the consequences of the virus.
Rosemary Gibson, advisor at the Hastings Center and author of “China Rx: Exposing the Risks of American’s Dependence on China for Medicine.”
“Million of Americans are taking prescription drugs made in China and don’t know it and neither do their doctors.
4. Emerging economies in which the Chinese have investments are vulnerable.
John Campbell, Ralph Bunche Senior Fellow for Africa Policy Studies, Council on Foreign Relations:
“In Africa, observers are acutely aware of how ill-prepared most countries are for responding to a major pandemic – with more than a billion people undergoing rapid urbanization, stuck with bleak healthcare systems, and with growing economics ties to China. It is estimated that there are more than a million Chinese immigrants on the continent. Africa would appear to be highly vulnerable to the spread of the Coronavirus.”
5. The SARS experience should quell some fears.
Brad McMillan, Chief Investment Officer – Commonwealth Financial Network
“In China, SARS hit growth hard for a short time, but then it passed quickly. Most of the damage came from consumers staying in and not spending, rather than from something fundamental. So, when the consumer came back, growth resumed.”
