The full effects might not ever be known, but certainly not until the coronavirus is contained and there is a vaccine against it. It’s unmistakable, though, that the economic impact of the outbreak is already a concern for Chinese officials. Since the Chinese economy is one of the world’s largest, it’s only a matter of time before the economic impact is felt around the world.
On Saturday, the beginning of the lunar new year, travel on public transport was down more than 40% in China from the same time last year. Several long-distance, high-speed train routes have shut down for the week. A travel ban in Wuhan and Hubei province, the epicenter of the outbreak, has 35 million people stuck, and the Chinese government closed all theme parks and canceled concerts as the number of coronavirus patients in the country approached 3,000. Many incoming tourists have also canceled their plans, costing millions of dollars.
When the SARS outbreak hit in 2002 and 2003, analysts out the global economic impact at more than $40 billion. The 2009 H1N1, aka swine flu, outbreak had an estimated economic impact of $55 billion. Wall Street is already bracing, as the Dow Jones Industrial Average lost more than 450 points Monday.
There have been at least 81 fatalities, and there are cases of coronavirus documented in a dozen other countries, including five cases in the US. Markets the world over were down 2% or more. Companies with direct business in China and travel industry players were the hardest hit, with Estee Lauder down 4%, Nike down 2% and Wynn Resorts losing more than 8%.
If past is prologue, the stock market downturn will be short lived as initial fears subside and the coronavirus threat dissipates. Still, it may be years before the full economic impact is known, if ever.