"Impact of Novel Coronavirus May Lower Global Economic Growth Rate by 0.3%p"

[Image source=EPA Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] Due to the spread of the novel coronavirus infection (Wuhan pneumonia), major institutions have successively downgraded their forecasts for the global economic growth rate this year. This is analyzed to be due to concerns over the impact of reduced production capacity in China, where major factories for industrial goods and parts are concentrated, and decreased trade with China if the novel coronavirus situation prolongs.

On the 9th (local time), Moody's Analytics, a subsidiary of the international credit rating agency Moody's, lowered its forecast for the global economic growth rate based on GDP from 2.8% to 2.5% in a recently published report. This is based on the assumption that the economic loss in China due to the novel coronavirus situation will be similar to that during the 2003 SARS (Severe Acute Respiratory Syndrome) outbreak.

Mark Zandi, Chief Economist at Moody's Analytics, stated, "The novel coronavirus poses a serious threat to China and the global economy," adding, "As a result, the global economy this year will fall below the potential growth rate of 2.8%, leading to an increase in unemployment." Earlier, global investment banks such as JP Morgan and Morgan Stanley also predicted that if the situation prolongs, it could cause a shock reducing the global economic growth rate by 0.30 percentage points. The UK economic analysis firm Oxford Economics also lowered its global economic growth forecast from 2.5% to 2.3%.

There is also a forecast that even countries without direct damage from confirmed novel coronavirus cases will inevitably face shocks if they have direct or indirect economic relations with China. The Overseas Development Institute (ODI), a UK think tank, in a report titled "Economic Vulnerability to Epidemics: Which Countries Are Most Vulnerable to the Coronavirus Shock," stated, "Even without confirmed cases, the novel coronavirus situation will have a significant impact on poor countries," estimating that "if China's demand decreases by 1% due to the coronavirus, exports of goods from low- and middle-income countries will decrease by $4 billion (approximately 4.7 trillion KRW), and tourism income will decline by $600 million."

Furthermore, the report noted, "Last year, China's share of global GDP was more than four times higher than in 2003, and the number of confirmed cases from the novel coronavirus is more than twice that of SARS," estimating that "if the global economic loss from SARS was about $50 billion, the loss from the novel coronavirus will be $360 billion."

This content was produced with the assistance of AI translation services.