Likely Impact of the Coronavirus on Global Economic Activities -By Ololade Agboola

The outbreak of a new virus similar to the 2003 SARS(severe acute respiratory syndrome) virus has brought the society thus the world at large in a state of tension and uproar. While agencies saddled with health responsibilities have responded consciously to the threat posed by the virus which is inimical to human health, this virus has claimed over 300 lives and infected more than 14,000 globally mostly in Wuhan China where it was recorded to have originated from.

Needless to say, the virus might endanger our economic environment if it proliferates and grows in its mortality rate unless adequate measure are taken to combat the virus. The economic impact will depend very much on the behaviour of the virus, the propagation of its gospel and dissemination however if the virus retreats quickly the impact likely will be small.

It is noteworthy that there will be slowdown in imports and domestic activities due to the closure of borders among states and people staying at home due to lack of confidence and fear. Scott kennedy, a senior adviser and trustee in chinese business and economics at the centre for strategic and international studies opined that much of the potential impact of the virus depends on whether it is contained or it turns pandemic.

China, the world’s most populous nation has become integral to nearly every sector of the global economy. It is the world’s largest manufacturer and imports more crude oil than any other country. Chinese travelers are the top spenders in international tourism, making 150 million overseas trips worth $277 billion in 2018. And the country’s 1.3 billion population which provides the largest market in the world for several categories of consumer goods have whipsawed this week as traders struggle to price in the risk of the outbreak. Investors have moved their money to safe havens like the U.S. dollar, the Japanese yen and gold. The prices of some commodities, including oil, have declined sharply over concerns that the virus and measures to contain it will lead to lower demand from China, according to Rabobank, a Dutch bank and financial services firm.

It is already apparent that the Wuhan coronavirus will hit tourism hard. Chinese authorities have announced a temporary ban on outbound group travel. Hong Kong, Taiwan, Singapore and the Philippines have stopped accepting visitors from China’s Hubei province, and Russia and Mongolia have closed their borders with China. Airlines across the world, from United Airlines to British Airways have cut flights to and from China or suspended them altogether.

Production for sectors from automobiles to technology is also likely to take a hit. Several automakers have assembly plants in Wuhan, including General Motors and Honda. Toyota Motor Corp. has halted its China production until Feb. 9 and Apple’s CEO, Tim Cook, said the company is taking steps to “make up any expected production loss.”McKibbin says that a lot has changed since 2003 and that today many companies are dependent on Chinese production.“It’s actually hurting production chains.”

The statement made by US president Donald Trump in a speech at auto parts manufacturer in Warren, Michigan on Thursday in which he denounces that he believe the virus was under control has led us into a servitude of instinctual primitivism, while measures are being taken to eliminate the coronavirus humans should maintain a healthy and hygienic environment not restricted to trading alone but all aspects of human life.

Ololade Agboola is a 500l law student at Obafemi Awolowo University, Ile-Ife.