World Economic Growth Forecast Lowered Due to Novel Coronavirus

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[Asia Economy Reporter Oh Hyung-gil] Major institutions are forecasting that the global economic growth rate will decline this year due to the spread of the novel coronavirus infection (Wuhan pneumonia).

On the 9th, Moody's Analytics, a subsidiary of the international credit rating agency Moody's, lowered its global economic growth rate forecast for this year from 2.8% to 2.5% based on gross domestic product (GDP).

This is based on the assumption that the economic loss to China caused by the novel coronavirus outbreak will be similar to that during the 2003 SARS (Severe Acute Respiratory Syndrome) epidemic.

Mark Zandi, Chief Economist at Moody's Analytics, stated, "The novel coronavirus poses a serious threat to both China and the global economy," adding, "As a result, the global economy this year will fall below the potential growth rate (2.8%), leading to an increase in unemployment."

JP Morgan and Morgan Stanley have also predicted that if the situation prolongs, it could reduce the global economic growth rate by 0.30 percentage points. The UK economic analysis firm Oxford Economics lowered its global economic growth forecast from 2.5% to 2.3%.

There is also an assessment that even countries without confirmed cases of the novel coronavirus will inevitably face economic shocks if they have direct or indirect economic ties with China.

The Overseas Development Institute (ODI), a UK think tank, in its report titled "Economic Vulnerability to Epidemics: Which Countries Are Most Vulnerable to the Coronavirus Shock," evaluated that "even without confirmed cases, the novel coronavirus outbreak will have a significant impact on poor countries."

It predicted that if China's demand decreases by 1% due to the coronavirus, exports of goods from low- and middle-income countries will decline by $4 billion (approximately 4.7 trillion KRW), and tourism income will decrease by $600 million (712 billion KRW). If the demand drop causes international oil prices to fall by 5%, mineral fuel exports from sub-Saharan Africa are estimated to decrease by $3 billion (3.6 trillion KRW).

The institute stated, "Last year, China's share of global GDP was 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 "while the global economic loss from SARS was $50 billion (59 trillion KRW), the loss from the novel coronavirus will be $360 billion (427 trillion KRW)."

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