Note by Maryam Azish
Coronavirus' Global Economic Impact
27 Mar 2020 8:52
Vigorously spread across China, the world financial markets have robustly reacted to the lethal coronavirus spread to Europe and the Middle East, fanning the flames of fears of a global plague.
In the meantime, the virus also known as Covid-19 risks have been priced so belligerently across various asset classes that some afraid of escalation of recession in the global economy might be an unavoidable conclusion.
On March 24, 2020, the World Health Organization cautioned that the global coronavirus pandemic is clearly "accelerating" underlying that the number of deaths have been skyrocketed over 21,000 worldwide, with more than 472,000 people infected.
The reality is the lethal virus is plummeting the world economy into its vilest decline since the global financial crisis.
The Organization for Economic Cooperation and Development (OECD), also has warned that the global growth could be decreased by half if the epidemic remains to spread, cautioning that the global gross domestic product would grow by just 1.5% in 2020 if the coronavirus spreads widely throughout Asia, Europe and North America.
In the meantime, it was anticipated that the figure could hit roughly half the 2.9% growth rate for 2020 before the outbreak, and severe enough to push Japan and Europe into recession.
Now the point is as the number of coronavirus cases remains to upsurge all over the world, there are profound anxieties over the potential economic impact of the virus. The virus which was originated in China and thanks to the size of China’s economy, a slowdown there from the COVID-19 epidemic will spread over to the rest of the Association of Southeast Asian Nations including Brunei Darussalam, Cambodia, Indonesia, Lao People's Democratic Republic, Malaysia, Myanmar, the Philippines, Singapore, Thailand, and Vietnam plus Japan and South Korea.
As per the latest ASEAN+3 Macroeconomic Research Office (AMRO) announcement the virus epidemic could reduce as much as half a percentage point from the economic growth of some regional economies in 2020.
For sure the abrupt influence on the region has been the interruption to travel, tourism and related industries. The flight postponements, travel advisories, restrictions and bans on visitors from China, China’s order to halt outbound travel groups and a more vigilant approach to travel owing to anxiety of contamination have all led to a shrill drip in tourism in the region.
In the meantime, the virus would also affect business within the ASEAN+3 region which have a rapidly growing number of confirmed cases of COVID-19. The industrial sector has been interrupted and domestic demand in the regional states has been undermined. Many regional economies, such as Singapore and Vietnam, are deeply integrated within regional and global supply chains and China is an important link in these networks. Notably, trade between China and the ASEAN region has grown strongly over the last two decades, so any disruption in China will impact regional trade and production.
Hence, the Eurasian countries are not immune from this lethal disease.
According to the Moscow Times, Russia has stepped up its measures to tackle the pandemic and prevent its spread within the country and has announced that by March 26 some 840 cases of coronavirus infections reported in this country so far and three deaths.
Also, the number of confirmed coronavirus cases in Ukraine reached to 156 by March 26 and five deaths .
By March 26, some 290 confirmed cases of coronavirus with no deaths in Armenia, prompting this Eurasian country to announce state of emergency, media and travel restrictions and closing of the schools.
Meanwhile, other Eurasian countries including Azerbaijan Republic, Georgia, Tajikistan, Turkmenistan, Uzbekistan as well as Kazakhstan have taken precautious measure aimed at preventing the spread of the virus including closing the schools, borders and shops except supermarkets, pharmacies, petrol stations, post offices, and banks.
To sum up the virus risks giving a further blow to a global economy that was already weakened by US-China trade war and the political tensions.
The governments are recommended to act instantly to prevent the epidemic, back the health care system, safeguard people, bolster demand and provide a financial lifeline to households, businesses that are most hit and the central banks are advised to implement strategies to aid soften the setback from the virus.
*Maryam Azish is media expert and student of Faculty of World Economy and International Affairs Higher School of Economics in Moscow.