Effects of coronavirus on global economies & trade are unavoidable
Dr Kerstin Braun, President of Stenn Group, comments on the effects of the Coronavirus on global economies and industries…
"The WHO’s director general, Dr Tedros Adhanom Ghebreyesus, might have played down the term pandemic for now, but the effects of the coronavirus on global economies are unavoidable. We've already seen GBP62 million wiped off the value of the FTSE 100 and shares on Wall Street sent tumbling. Share prices in Asia also slid for the second straight day on Tuesday. We already know from our own research that half of firms in the UK and US (46 per cent and 45 per cent respectively) predict a recession in 2020, while a further third (37 per cent and 35 per cent) predict a global recession this year. These predictions could very much become a reality if the virus isn't contained and every week we're seeing news of another countries' GDP hit. Tourism dependent countries, particularly those in Asia such as Thailand, Malaysia and Cambodia could be worst affected, after bookings have dried up from the globe-trotting Chinese who account for over 15 per cent of the world’s tourism spending.
"The Coronavirus is also likely to affect global trade. US imports are being held hostage at the ports when coming in via ship. Vessels need to wait 14 days until they are able to access the port and offload, slowing down US imports. For China, where the outbreak first began, the virus could topple China’s dominant manufacturing position and companies will need to diversifying their supply chains. This could lead to more balanced global trade relationships, particularly if emerging manufacturing countries such as Vietnam are about to capitalise on the opportunity. We know Chinese GDP in the first and second quarter will be impacted by the effects of the Coronavirus and its likely supply chains will move to Vietnam. We'll also see more advanced goods such as tech going to India, and more apparel going to Bangladesh.
"The automotive industry will also be affected by the Coronavirus. Supply chains are slowing down in China as manufacturing is not at its full capacity. Factories are opening back up but with only about 50 per cent of the workforce. Given the automotive industry is already struggling to adopt to the lower and changing demand for cars, particularly as more people are opting for electronic vehicles, the Coronavirus is likely the automotive industry could be soon hit."