Tag Archives: costs

Coronavirus: How Affects the World Economy – BBC News

Coronavirus: How Affects the World Economy – BBC News

Coronavirus outbreak, which originated in China, has infected tens of thousands of people. Its spread has left businesses around the world counting costs.

Here are eight charts to help you understand the impact seen on different economies and industries so far.

Global shares take a hit

Investors have been worried about the impact of the coronavirus as it spreads outside of China.

Big shifts in stock markets, where shares in companies are bought and sold, can affect investments in some types of pension or individual savings accounts (Isas).

The FTSE, Dow Jones Industrial Average and the Nikkei have all seen sharp falls since the outbreak began.

In the second week of March, the Dow saw its biggest one day decline since 1987.

The markets overall have seen major swings and continued volatility.

The US central bank has slashed interest rates in response to mounting concerns. That should, in theory, make borrowing cheaper and encourage spending to boost the economy.

Growth could stagnate

If the economy is growing, that generally means more wealth and more new jobs.

It’s measured by looking at the percentage change in gross domestic product, or the value of goods and services produced, typically over three months or a year.

The world’s economy could grow at its slowest rate since 2009 this year due to the coronavirus outbreak, according to the Organisation for Economic Cooperation and Development (OECD).

The think tank has forecast growth of just 2.4% in 2020, down from 2.9% in November.

It also said that a “longer lasting and more intensive” outbreak could halve growth to 1.5% in 2020 as factories suspend their activity and workers stay at home to try to contain the virus.

Travel among the hardest hit

The travel industry has been massively impacted, with airlines cutting flights and tourists canceling business trips and holidays.

Data from analytics firm ForwardKeys for the period up to 8 March shows international flights booked from the US are behind by 37% in comparison with the same period in 2019.

Restrictions introduced by the Trump administration on travel between the US and European airports, except those in the UK and Ireland, are likely to reduce overall traffic even further.

UK travel industry experts have expressed concerns about Chinese tourists being kept at home. There were 415,000 visits from China to the UK in the 12 months to September 2019, according to VisitBritain. Chinese travelers also spend three times more on an average visit to the UK at £1,680 each.

As more large-scale events are canceled and the number of flight cancellations increases, there are fears the industry could take a bigger hit.

Many countries have introduced travel restrictions to try to contain the virus’s spread.

Factories slowing down

China makes up a third of manufacturing globally and is the world’s largest exporter of goods.

But activity has decreased in the so-called “workshop of the world” as factories pause their operations to try to contain the spread of Covid-19.

Nasa said pollution-monitoring satellites had detected a significant drop in nitrogen dioxide over the country. Evidence suggests that’s “at least partly” due to the economic slowdown caused by the outbreak.

Restrictions have affected the supply chains of big companies such as industrial equipment manufacturer JCB and carmaker Nissan. Both rely on China’s production and its 300 million migrant workers. Jaguar Land Rover even said it had flown car parts in suitcases as some factories run out of parts for vehicles.

Customers buying less

Fear of the coronavirus outbreak means that some people are choosing to avoid activities that might expose them to the risk of infection, such as going out shopping.

Restaurants, car dealerships, and shops have all reported a fall in customer demand.

Chinese car sales, for example, dropped by 92% during the first half of February. More carmakers, like Tesla or Geely, are now selling cars online as customers stay away from showrooms.

Shipments of smartphones are also expected to take a big hit in the first half of 2020, before seeing a recovery later on.

Some bright spots

It can be hard to find positives when people’s jobs are affected, or – as in the case of the coronavirus outbreak – lives are being lost.

But in purely business terms, there are some bright spots. Consumer goods giant Reckitt Benckiser, for example, has seen a boost in sales for its Dettol and Lysol products.

The disinfectant is seen as protection against the spread of the disease, although its effectiveness has not yet been scientifically proven.

Gold – The Winner

The price of gold – which is often considered a “safe haven” in times of uncertainty – has also increased. Its spot price hit a seven-year high of $1,682.35 per ounce in February.

Investors are looking to it amid fears the coronavirus spread outside of China will further hit the global economy and demand.

— https://www.bbc.com/news/business