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Will Corona Virus Affect the World Economy? See the Explanation

Corona virus outbreaks have been haunting market movements for a week. See the details here.

Will Corona Virus Affect the World Economy? See the Explanation
kompas.com
A car drove on the streets of Wuhan, China, which was deserted due to the deadly corona virus outbreak on Sunday (1/26/2020). 

TRIBUNBATAM.id - Corona virus outbreaks have been haunting market movements for a week. Exactly after the signing of the phase one trade agreement between the US and China.

This negative sentiment also continues to overshadow the movement of assets, including assets in emerging markets. 

Based on Kompas.com, quoting from CNN, Monday (1/27/2020), investors are now wary of the global economic impact of the virus outbreak that is now spreading in Wuhan, China

The virus appeared in the city of Wuhan, China, last month and has infected hundreds of people around the world, including three cases that occurred in the United States. The death toll in China also continues to increase to more than 50 people.

"The rapid spread of the virus means there is no doubt that it will disrupt the economy this quarter," said Julian Evans-Pritchard, senior Chinese economist at Capital Economics.

On the other hand, the corona virus outbreak also brought back memories of the SARS virus which was highly contagious and caused global panic in 2003. The virus which also originated from China infected more than 8,000 people and killed as many as 774 people at that time.  

This incident also made China's GDP (Gross Domestic Product) being plummet from quarter to quarter at the time.

China as the biggest economy country besides the US, then fought desperately to recover losses. Moreover, the issuance of a tourist ban on the region and its impact on the expansion of retail sales has slowed China's economic conditions.

However, the World Bank said, although slowing down, the movement was not negative or grew more than 10 percent (slightly faster than the previous year). 

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Learning from this case investors and economists are really very worried about the corona virus.

"Concerns are growing when travel bans are restricted and will begin to have a large impact on China's economy and GDP in the first quarter of 2020," explained Edward Moya, senior market analyst at Oanda.

Losses do not stop there, the closure of tourist businesses such as Shanghai Disney parks are also considered to be able to reduce consumer spending at a very difficult time like this. 

Meanwhile, European market data showed higher growth last Friday following better-than-expected economic data from Germany.

However, if the Chinese economy grows at a slower pace than expected, this will affect European countries that depend on Chinese exports. (*) 

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Penulis: Lia Sisvita Dinatri
Editor: Lia Sisvita Dinatri
Sumber: Kompas.com
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