Due to the ongoing coronavirus crisis, global stock markets have been falling each day over the last week, amounting to the worst decline since the global financial crisis in 2008 (He). The virus has spread to every continent except Antarctica since Wednesday, February 26 when Brazil confirmed its first case involving a 61 year old man who travelled back from Italy (De Sousa). Large corporations including Disney, Apple, and Microsoft have been issuing warnings to their investors about the potential consequences on business (He). These problems have likely arisen not only due to disruptions in the supply network for these organizations but also because of weaker demand for things such as Apple iPhones and airline flights (Egan). Furthermore, the effects of the US-China trade war have already diminished the global economy, thereby compounding the effects of the coronavirus scare (Egan).
In order to help predict the financial effects of the epidemic, economists have been directing their attention to the previous SARS outbreak in 2003. The SARS virus caused a $56 billion dent to the global economy and Chinese and American GDPs fell by 1% and 0.07%, respectively (Soergel). However, a few factors limit the pertinence of such historical data, namely that the current outbreak has already infected more than 10 times as many people and has appeared in more than twice the number of countries. Oxford Economics predicts a worst case scenario where the outbreak is not contained and becomes a pandemic would lead to stunted growth of the global economy by $1 trillion dollars (Soergel). Fortunately, most analysts do not expect the coronavirus to develop into that bad of an epidemic (Soergel). In the present, it is still not 100% clear as to what the economic ramifications of the coronavirus will be since according to the Conference Board, consumer confidence actually improved in February, which contrast with the stock market (Egan).
De Sousa, Marcelo. “Brazil Confirms First Coronavirus Case in Latin America.” AP NEWS, Associated Press, 26 Feb. 2020, apnews.com/fd3d0d0120dd10f3d09bad78a4dd9539.
Egan, Matt. “How the Coronavirus Could Spark a Severe Slowdown or Recession in America.” CNN, Cable News Network, 26 Feb. 2020, edition.cnn.com/2020/02/26/economy/coronavirus-recession-consumer-spending/index.html.
He, Laura. “Asian Markets Fall as Coronavirus Continues to Spread.” CNN, Cable News Network, 28 Feb. 2020, www.cnn.com/2020/02/27/investing/asian-market-latest/index.html.
Soergel, Andrew. “The Economic Cost of the Coronavirus.” U.S. News & World Report, U.S. News & World Report, 21 Feb. 2020, www.usnews.com/news/the-report/articles/2020-02-21/the-economic-cost-of-the-coronavirus.