Reportedly economic activity has almost come to a standstill in china as major businesses and investors remain spooked about the future impact of the novel respiratory virus (2019-nCOV or COVID-19) outbreak, which has already claimed over 1,300 lives and caused over 48,000 infections. Meanwhile disturbance caused by the flu-like virus has affected key sectors like global tourism, trade, manufacturing and export/import. But the biggest jolt has come from the shutdown of many businesses from major retail chains to automobile and smartphone manufacturing firms in mainland China.
Furthermore as a result, countries that have a high dependency on china for goods especially small components and parts have suffered. Market experts fear that the world's over-reliance on china will continue to hurt global growth until the virus is contained. Commenting on the possible risks, sunil Damania, CIO, MarketsMojo.com, said: "There is a great danger that world economic growth could take a beating due to the virus as china accounts for 12 per cent of world's GDP growth rate."
He added "There could be a severe indirect impact on many producers (outside China) who source their raw materials or components from China". Reportedly with no sign of a breakthrough in he added containing the virus, analysts at S&P say Chinese production activities are likely to remain subdued for nearly two quarters before a revival. Economists also predict that the virus outbreak in china could reduce global GDP by almost 0.3 per cent. Economists say the disruption caused by the virus in china could pave way for more foreign investments in emerging economies like india, bangladesh, and vietnam as the world looks to reduce dependency on china, the largest manufacturing hub in the world.
