As the World Health Organization has elevated the global public health threat level posed by the coronavirus to ‘very high’ (China) and ‘high’ (rest of the world), global economic health is also beginning to suffer. The number of people affected by the coronavirus globally may seem relatively small — just over 360 deaths and 17,290 people infected — yet without containment, especially to avoid spread to countries with weaker healthcare systems, the human (and economic) toll could rise rapidly into a full global epidemic.
As the second-largest economy in the world, the spread of the virus through China has already echoed in the global markets. On January 21, trading volumes on the stock exchanges in Hong Kong, Shanghai, and Shenzhen decreased by 2-3.5 percent. A week later, as the number of cases continued rising, the virus reverberated on the FTSE 100 and with global oil prices. Prices of safer assets, such as gold, however, have increased.
As the virus continues its spread, concerns are only exacerbated with regard to China’s economic sustainability, which is already stressed because of slowing GDP growth, African swine flu outbreak, and the trade war with the United States. Hubei province, where the virus started, is one of the largest provinces in China accounting for 4.3 percent of the country’s GDP and a nearly equal share of the country’s population. For comparison, the avian flu outbreak in 2003 affected much more economically significant regions of China — the Guangdong province and Beijing — which represented 13 percent of China’s GDP.