A few weeks ago, novel coronavirus was a plague limited to the Chinese city of Wuhan. Gradually, it spreads across cities and countries beyond China. There is no continent free of the virus. Botswana has recorded the first case in the African continent. There have been over 9,600 confirmed cases, 12,167 suspected cases, and over 1,476 are in critical condition. It is becoming a pandemic with a devastating impact beyond the health circle.
On Thursday, the World Health Organization (WHO) declared coronavirus a public health emergency, a decision they were reluctant to make just a week ago. The organization has said last week that the virus did not yet constitute emergency declaration. But the rising number of cases across countries necessitated an emergency meeting in Geneva, and the virus was declared a global health emergency.
“The main reason for this declaration is not because of what is happening in China, but because of what is happening in other countries. Our greatest concern is the potential for the virus to spread to countries with weaker health systems, and which are ill-prepared to deal with it,” said WHO Director-General, Tedros Adhanom Ghebreyesus.
Beyond the health crisis, the virus is also wrecking economic havoc globally, just as it happened in 2003, at the outbreak of Severe Acute Respiratory Syndrome (SARS). Sites of attraction, leisure venues, cinemas, bars and clubs, and many other businesses having to do with tourism, all suffered from the escalation of SARS. China and Hong Kong reportedly lost $13 billion in GDP.
The story today seems to be becoming the same. Wuhan accounts for one percent of China’s GDP, with its booming population of over 11 million people, hospitality business keeps the city bubbling. Wuhan has been on lockdown and the movement of over 30 million people in China restricted through a government imposed curfew.
Wuhan was regional economy with growth rate expectation of 7.8 percent in 2020, a performance above China’s economy that is expected to grow by just 6 percent. The city receives 55 international flights each week from more than 20 countries, according to data from aviation data analytics firm Cirium.
It goes beyond Wuhan to other cities in China where businesses and activities are getting closed to prevent human to human infection of coronavirus. Outside China, neighboring countries are in the region are counting their losses already.
“We certainly expect there to be an impact on our economy, business and consumer confidence this year, especially as the situation is expected to persist for some time,” said Singapore’s Trade Minister Chan Chun Sing.
Chinese nationals make the large number of tourists visiting Singapore. With some Chinese cities on lockdown and travel restrictions imposed, the Singaporean tourist industry has witnessed significant losses.
In the United States, stocks are reacting negatively to the escalation. The Dow Jones Industrial Average fell more than 450 points, following the record of coronavirus in the country. It is feared that the stocks may keep falling following the spread of coronavirus. In Japan, the Nikkei stock market suffered its worst drop three days ago. European markets were also hit, following the news that the virus has been recorded in Germany and UK.
The most affected sectors of the global economy are aviation and tourism. Flights are getting cancelled and travel advisory is being issued by many countries warning their citizens to stay away from affected countries. In the US, pilots union has filed a suit to halt American Airlines flights to China. The 15,000 professional pilots who fly for American Airlines are seeking a restraining order from the court that will stop all airline services between the US and China.
The first human to human transmission of the disease has been recorded in the US, signaling potential spread. Though president Trump said the situation is under total control, the panic is taking away economic freedom as many people are choosing to stay in door. The US economy is expected to take the hit soon in addition to its first quarter economy slow down that’s partly orchestrated by the Boeing crisis.
“It’s going to have a hit on Chinese spending. We may see more of it in the US but we just don’t know at this point. It’s very uncertain,” Barclays US economist Jonathan Miller said.
Russia has closed its border with China in a bid to stop movement of people from infected places into the country. There is a report of an isolated cruise ship in Italy holding a Chinese woman who had a fever and was suspected of having the virus.
Borders are getting shut, flights are being cancelled and businesses are being shut down. There is no time frame for reopening of these economic activities and the return of normal life. Though Africa appears to be the least affected by the virus right now, its economic dependence on the rest of the world means it will share the same economic fate with the more affected countries, especially China, which its economic dominance touches almost every country in the continent.