China’s Coronavirus Could Hurt the Global Markets

The virus has already killed six people and made hundreds of people ill.

Consumers are reeling from the news that a new virus is quickly spreading across China. The coronavirus, which is also dubbed “Wuhan pneumonia” has already killed six people and has infected over 291 people. 

For many people, the virus is reminiscent of the SARS outbreak from 2003, which killed 800 people. The coronavirus is in the same family of viruses as a severe acute respiratory syndrome. 

But will the coronavirus reach the same level as the SARS outbreak? Let’s look at what is known about the virus so far.

What is happening with the coronavirus?

The virus causes a type of pneumonia and is believed to have originated at a wholesale seafood market in Wuhan. Wuhan is located at the center of China and is home to over 11 million people. 

According to the World Health Organization (WHO), the outbreak appears to have come from an animal source, though the source of the virus is unknown. The virus can spread between people and causes fever and labored breathing. 

The coronavirus has spread to other cities in China, as well as Thailand, Japan, and South Korea. And the WHO has warned that the virus will likely continue to spread.

The potential for the virus to spread is especially a concern given that the Lunar New Year holiday is approaching. This is typically a time when millions of people will travel overseas, which could increase the likelihood of transmissions. 

However, the WHO doesn’t expect the coronavirus to reach the same level the SARS outbreak did. For one thing, the coronavirus doesn’t appear to be as lethal as the SARS outbreak.

Not to mention, China has responded much more quickly to the coronavirus than it did with SARS. With the SARS outbreak, China took over four months to notify the WHO. 

In comparison, the Chinese government notified the WHO about the coronavirus last month when the outbreak began. 

Will markets be negatively affected?

Global markets will be affected by the coronavirus but analysts are expecting the impact to be minimal. According to Rory Green, an economist at the research firm TS Lombard, the impact should be short-lived, thanks to the quick response of the Chinese government.  

Other analysts speculate that travel companies could be affected by the outbreak since many people will be hesitant about traveling. The Chinese travel company Trip.com already saw its stock drop 14% after consumers began canceling their travel plans for the Lunar New Year holiday.

Green concluded that the coronavirus would likely affect retail sales and tourism, but believes that growth will stay on trend at 7%. 

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