The outbreak of the coronavirus epidemic caused excitement not only in the field of medicine, but also shook the unstable economic situation. Statistics show that mortality from this infection is much lower than from other, long-known diseases, such as tuberculosis or diphtheria. However, the coronavirus can affect the economy of both China itself and other countries.
The impact of coronavirus on the Chinese economy
Coronavirus and the economy: what is the connection between them? Due to the spread of the disease, cities are quarantined, which stops productivity.
Many businesses in China have been suspended for the long period of the New Year holidays. The work of some has not been restored due to the outbreak of the epidemic. On New Year's Eve, the Chinese traditionally go to visit, visit entertainment centers, actively use the services of the restaurant business, so sales usually rise. Since the announcement of the coronavirus, demand for goods and services has plummeted.
The performance of small and medium-sized businesses has suffered. Retail sales fell 21% in February and March.
Large enterprises suffer losses. Leading car manufacturers such as Volvo, BMW, Volkswagen, and later Toyota, after the news of the epidemic, suspended the work of factories in China. The productivity of machine-building plants KIA and Hyundai in South Korea has sharply decreased. The Fiat Corporation has announced that one of their factories may be suspended due to a lack of parts to assemble the car. Chinese factories that manufacture Apple and Samsung products have suspended work. Some Chinese traders have been known to cancel contracts to supply natural gas and metals for manufacturing.
In China, attendance at shopping malls, casinos, restaurants and hotels has dropped by 80%, according to some reports. The owners of these establishments are suffering unprecedented losses that cannot be mitigated by cutting costs.
Forecasts for the future of the Chinese economy
Experts see three possible forecasts for the economy of China and the world.
- The pandemic will be defeated in the near future with minimal loss to the global economy. Most of the costs will be felt by the Chinese economy. The recovery will take several months.
- Every country affected by the pandemic will suffer significant losses. The virus will be contained and the global economy will recover by June-July 2020. You won't have to go through a recession.
- The coronavirus pandemic will practically kill the Chinese economy, which will entail terrible losses for the whole world. In some countries with large populations, the number of victims will be in the millions. It will take a year or more to restore the economic situation. Such a scenario was considered unlikely, but is now seen as realistic.
Such forecasts are based on how previous major epidemics have affected the world economy, and based on the latest data from China.
Domino effect: the world economy is crumbling
In 2003, China was in sixth place on the list of countries influencing world trade. At the time of the outbreak of the coronavirus epidemic, there was a fair fight between Beijing and Washington for the first place in the ranking. And the more China is involved in the planet's economy, the more damage everyone has to endure if trade and productivity there plummets.
It is worth noting that at the time of the outbreak of the coronavirus, the economic situation in the world was already in a state of decline. Part of the reason could be the trade wars that arose after the UK left the countries that make up the European Union. The military conflicts between Iran and the United States also bear losses for the economy. All this led to the fact that by the beginning of this year, exchange rates in many countries were changing.
If the foundation of the global economy had not been in such a shaky state by the time the pandemic hit, the impact of the coronavirus on the global economy would not have been so dire.
Interesting! According to 2015 statistics, 20% of the goods needed for the operation of enterprises around the world are imported from China. In subsequent years, China's productivity increased even more. If we talk about the pharmaceutical world market, then it is dependent on Chinese products by 88%.
Shipments from China decreased significantly, which greatly affected the industry in other countries. Experts say that if exports from China are not urgently resumed, which is unlikely, the world will feel the sharp consequences as early as April.
Theory: Coronavirus was launched to artificially shake up the global economy
China has suggested that the coronavirus is an artificial shake-up of the planet's economy brought from America. This assumption has a number of reasons.
- The United States has a huge network of biolaboratories producing biological weapons of this type in a wide arsenal.
- The virus is hybrid and has a complex code. According to the statement of experts, such a set of codes could not have appeared naturally, but only in laboratory conditions.
- The epidemic came at the right time. During this period, trade wars between China and the United States are especially hot. In addition, about six months ago, the American president told China that he would be very sorry if he did not give in.
- That the virus broke out in Wuhan seems no accident. The city has more than eleven million inhabitants. The US consulate is located there, which was closed before the coronavirus became known. Other large cities, such as Hong Kong, Beijing, Shanghai, are filled with American companies and factories, as well as workers from the United States, so it is not advisable for Americans to create a hotbed of an epidemic there.
Whatever the cause of the outbreak of the coronavirus, it is encouraging that China is closing specially created temporary hospitals, which means that the epidemic is declining there. The faster it subsides around the world, the faster the global economy will be restored after the coronavirus.