The outbreak of deadly coronavirus has slowed down the Chinese economy. Along with it’s spread outside the Wuhan province, entire China is in grip of this virus and to reduce the likelihood of its transmission outside China, business-related travels, as well as the movement of goods have been prevented. People are advised to not come outside their home, and this lockdown has resulted in a reduced number of customers and transactions at restaurants, cinemas, hotels, shops, and all such retail businesses. The drastic decline in financial transactions and business is greatly impacting the overall economy of China.
Travel Industry feels the Heat
Along with the impact on the entire Chinese economy, the spread of deadly coronavirus has a direct impact on the tourism industry of China. Since its outbreak, there is a drastic decline in tourists visits this country resulting in empty hotels. Several countries have also issued warnings and advisory to its citizens to avoid visiting China and nearby regions which are on brink of getting this infection. The Chinese authority has also required citizens to prohibit traveling abroad and avoid domestic travel. Furthermore, Major airline companies like Lufthansa and its subsidiaries have already suspended direct and connecting flights to Beijing until the end of February.
China’s GDP expects zero percentage growth this quarter.
Ed Hyman, Chairman of Evercore ISI Research, a US-based investment consulting firm, expects a major reduction in the growth of Chinese GDP in the 1st quarter. According to CNBC, in Hyman said, “Our team has GDP growth at zero for the first quarter. China is slowing and that’s worrying people for sure.”
He added the outbreak of Coronavirus will not have much impact on the U.S economy. People in the US are going out and making transactions and trade, and hence the US market is not expecting a negative impact of this epidemic.
The Road Ahead
The sharp decline in consumption halted factory production and snapped global supply chains are not only making the Chinese economy suffer, but the slowdown of the vast Chinese market is expecting to have a significant impact on the World economy.
The World Health Organization has declared this outbreak as a Global Health Emergency envisioning the probability of its spread to the nearby regions and other South Asian countries. Considering it as a global issue, the major countries are attempting to restrict all sorts of trade, transport and other direct exchanges with China to keep its citizens safe. Consequently, the global supply chain has been considerably disrupted. It would be too early to comment about the global impact of this epidemic, however, if a specific treatment will not be found in the near future, the world economy may see significant disruption and slowdown.