by Grace Hwang
With more than 40,000 confirmed cases and the death toll already above 900, the coronavirus has turned into a global health epidemic. And with a rampant virus like this, economic concerns are sure to follow.
China is vital to the global economy for multiple reasons. Thousands of foreign businesses have opened their own factories and shops in mainland China. Much of the world’s raw materials are transported to China before being turned into manufactured products, making it a central part of global supply chains. And with a population of over 1.4 billion, there are plenty of consumers willing to buy the many foreign goods available for purchase.
However, the coronavirus has resulted in the majority of Chinese industries being forced to shut down over the two weeks around Lunar New Year, with some still remaining closed until February 14th. Car plant closings have forced global automakers such as Toyota, Honda, and Volkswagen to halt activities in the world’s largest market, and auto parts shortages have forced Hyundai to close plants in South Korea. Luxury good makers such as Burberry have closed 24 out of 64 of their stores in mainland China, as the demand for luxury goods decreased due to people trying to stay safe in the comfort of their own homes.
Wuhan, the epicenter of the outbreak, is home to 11 million people and considered a major industrial center, regional hub, and important place for the automotive industry and foreign businesses. It also has the third largest education and scientific base in China and two top universities. It’s clear that the shutdown of this large, bustling city would’ve had a significant impact on not only on their economy but on the rest of the country and world.
With the closing of hundreds and even thousands of global brand stores in China, such as Apple, Starbucks, and Levi’s, major factory shutdowns, plummeting stock markets, and more, the impact on the world economy is expected to decrease growth by about 0.3%.
However, only time will be able to tell how much more the coronavirus will continue to spread around the world and affect the global economy.
