ASSESSMENTS

Measuring the Economic Impact of the Coronavirus Outbreak

undefined and Senior East Asia Analyst
Zhixing Zhang
Senior East Asia Analyst, Stratfor

Jan 31, 2020 | 18:47 GMT

This photo shows a masked vendor and customers of his wares in an alley in Wuhan, China, on January 31, 2020.

A shopper in Wuhan, China, examines produce at a vendor's stall on Jan. 31, more than a week into the quarantine of the city brought on by the outbreak of a potentially-deadly coronavirus. The economic blow to the provincial capital will be substantial, especially as the quarantine lingers, and could reduce Chinese economic growth by as much as 1.5 percent, some estimates show.

(Getty Images)

Highlights

  • China's already-weakening economy is set to take a significant blow as measures taken to limit the spread of a coronavirus outbreak disrupt the travel and spending period that began with the Jan. 25 Lunar New Year. 
  • Past experience suggests that once the outbreak is contained, affected sectors like transportation, retail and restaurants will quickly rebound.
  • Extended quarantines and transit disruptions could have longer-term consequences for China's industrial, manufacturing and commercial output and supply chains.
  • At this point, the economic impact of the coronavirus appears mostly confined to China, but the outbreak will continue to unsettle global markets, at least in the short term.

The coronavirus outbreak that has killed scores and sickened thousands is set to deliver a significant blow to China's already-weakening economy. Quarantines and travel bans put into place to limit the spread of the illness already have disrupted one of the country's busiest travel and spending periods of the year, the Lunar New Year holiday, which began Jan. 25. The lockdowns have created major supply chain disruptions in Hubei province, the key Chinese transit hub and major manufacturing center for automobiles, fiber optic cable and machinery where the outbreak started. Public transportation, including trains, planes and ferries in and out Hubei -- whose provincial capital, Wuhan, was the epicenter of the outbreak -- have been suspended, with the freedom of movement curtailed for some 60 million people. The disruptions are not limited to the province, however, as business and industrial activities across the nation, already substantially slowed or even suspended...

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