Sickness and loss of life due to the global coronavirus is, of course, the major tragedy of the outbreak. However, that is not to belittle the worldwide economic impact of the crisis, some of which is already being felt.
Economic damage from the coronavirus outbreak is expected to lower gross domestic product growth to a 1.2% rate in the first quarter, according to 11 forecasters surveyed by CNBC, down from 2.1% in the fourth quarter of 2019.
The forecast comes on the heels of a jobs report showing signs of a robust economy. On Friday, the Labor Department announced that 225,000 workers were added to payrolls in January, beating expectations that 160,000 new jobs would be created. Also, Michelle Bowman, a member of the Federal Reserve’s Board of Governors, told the Conference for Community Bankers on Monday that economic conditions are favorable toward growth.
“My outlook for the U.S. economy is for continued growth at a moderate pace, with the unemployment rate, which is the lowest it has been in 50 years, remaining low … on the whole, the national economic backdrop looks very favorable,” she said.
Still, the Federal Reserve noted in its monetary policy report released last week, that the virus “could lead to disruptions in China that spill over to the rest of the global economy” and that “possible spillovers from the effects of the coronavirus in China have presented a new risk to the outlook.”
The virus could disrupt international supply chains, which means products could become scarce. Smartphone chip manufacturer Qualcomm recently warned that the outbreak had caused uncertainty regarding production and demand for their products.
The killer virus has spread around the world with confirmed cases in Britain, the US and India. This as governments scramble to close their borders and retrieve their worried citizens from Wuhan. China has since imposed a drastic quarantine on Wuhan, where the virus is believed to have jumped from wild animals sold for food at a city market, and then infected humans. Last week, China raised the death toll to 213 with nearly 10,000 people infected, but there are fears that the official figures are “way too low” – sparking claims of a cover-up.