The World Health Organisation has not yet classified the Covid-19 outbreak as a pandemic, but fears are mounting over the cascading impact of the virus on a highly-connected global economy.
The contagion, which the WHO has termed a global health emergency, is now spreading further outside China, sparking concerns about a pandemic.
Italy is the epicentre of the virus in Europe; infections have spiked again in South Korea and Iran, while Afghanistan, Bahrain and Kuwait all reported their cases.
World stock markets and oil prices were hammered on Monday by fears of a pandemic, while gold hit a seven-year peak on safe-haven buying.
Italy’s economic engine ground nearly to a halt on Monday amid Europe’s largest coronavirus outbreak. Milan, the country’s financial hub, and the productive regions of Lombardy and Veneto were in virtual lockdown. Venice, the city that invented quarantine in the face of medieval epidemics, has shut down its historic annual carnival to limit infection.
Italy’s economy, which grew 0.2% in 2019, was last in technical recession (identified as two consecutive quarters of contraction) in the previous year.
South Korea has warned its fragile economic recovery is under threat from the coronavirus. Samsung Electronics and LG Electronics were among companies taking precautions as the number of cases rises, including the infection of a Samsung employee at a local production facility. The country’s largest technology company shut down a plant in Gumi City over the weekend after the employee tested positive for the virus, restarting operations Monday afternoon.
President Xi Jinping has urged China to “spare no effort” to contain the outbreak in Beijing.
The global economic disruption brought about by the virus has prompted traders to load up on bets that central banks will have to ride to the rescue.
They’re pricing in a total of 205 basis points of interest-rate cuts from seven major central banks by the end of the year, up three fold from the end of 2019, according to calculations based on Bloomberg’s World Interest Rate Probability.
Investors now see the US Federal Reserve reducing rates at least twice this year.
The WHO chief on Monday warned countries to prepare for a “potential pandemic” of the virus, calling the sudden increase in cases in Iran, Italy and South Korea “deeply concerning”.
According to a study by the World Bank, a severe pandemic could cause economic losses equal to nearly 5% of global GDP, or more than $3tn.
Just as fears mount that the coronavirus outbreak is evolving into a pandemic; so also a co-ordinated global response is required to contain the disease.
But our first line of defence against the virus need be just simple. It should mean following some of the basic practices suggested by specialists: regular and elaborate hand-washing; avoiding putting hands on faces and nostrils; limiting contact with regularly touched surfaces like lift buttons; and always maintaining good personal hygiene.
For sure, every pandemic is a worrying emergency, but mercifully, they are relatively rare too.
And we shouldn’t be overly alarmed, but we should certainly be alert.
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