The outbreak of the coronavirus in China is a major issue for the Chinese economy and to a wider extent, for the international stage. SARS syndrome linked to the coronavirus has already triggered an epidemy in 2003. Some lessons from the SARS can still be extrapolated, like the behavior of the main operators, but the global macroeconomic backdrop is very different from 2003. Which economic outcomes should we expect from the coronavirus?
Despite the important paralysis of the Chinese economy, 2020 growth forecast can be revised to 5.5% from 5.7%, as one can expect a stimulus plan to offset this crisis, once the epidemic has been contained. Growth forecast in Europe for full year 2020 can be revised by 0.1% to 0.7%, as well.
The most impacted sectors are hospitality, infrastructure (including transport) and raw materials. The temporary shutdown of the production of many industries in Wuhan have reduced raw materials’ needs leading to a sharp drop in metals and oil prices. Wuhan is a major logistic hub with immobile trains and grounded planes, generating serious disruptions in other regions, but also in other countries.
The extent of the impact remains unknown. It will most certainly be stronger than in 2003 with a Chinese economy weighing 19% of the world economy and mainly dependent on consumption. If the shock will be temporary and followed by a strong rebound, the impacts on sectors and countries will nevertheless be very different.
While new outbreaks of Covid-19 virus in South Korea and Italy are raising fears of a pandemic, the impact of this health crisis on the most affected sectors is only now beginning to be quantified. The IATA notably states that they expect the number of air passengers to decrease for the first year since 2009.
Thibault Cuillière, Head of ENR/Real Asset Research at Natixis
Listen to our experts’ analysis in this podcast:
- Jianwei Xu - Senior Economist, Greater China
- Gary Ng - Economist, Sectorial Research, Asia
- Philippe Suchet – Financial Analyst
- Radek Jan - Infrastructure and Green & Sustainable Analyst