The bigger virus damage
From what we’re seeing, the 2019 novel coronavirus (2019-nCoV) could well hit the global economy far more severely than global public health itself. As of this writing, deaths directly attributed to the disease have been tallied at 493, all but two of them in China (the Philippines and Hong Kong have one each), out of 24,643 confirmed cases now in 28 countries. But less than 1 percent (243) of these are outside of China. Based on these numbers, the mortality rate is 2 percent. Critical cases number 3,223 (13 percent), while 1,039 (4.2 percent) have so far recovered.
In comparison, around 10,000 Americans have died and 180,000 hospitalized during the 2019-2020 flu season, based on preliminary data from the Centers for Disease Control and Prevention, with an estimated 19 million Americans catching the flu each year. Meanwhile, the World Health Organization reports that dengue hit 3.34 million people worldwide in 2016, and an estimated 500,000 need to be hospitalized each year, with an estimated 2.5 percent dying. Dengue, the common flu and 2019-nCoV are all caused by specific viruses. Is the seeming mass hysteria about 2019-nCoV a misplaced overreaction, then?
The government of China has acted decisively (albeit belatedly, according to critics) with severe measures that have included a complete lockdown on Wuhan, the epicenter of the outbreak, followed by other cities in the province of Hubei. Tens of millions have been affected by the forced quarantine, which has virtually put Wuhan at a standstill. Ten-lane thoroughfares reportedly lie empty as private cars were banned and buses and subways ceased operation. Even Shanghai, more than 800 kilometers away, saw visitors dwindle in its tourism areas normally bustling with people during the Chinese New Year holidays. In an unusual move, President Xi Jinping extended the official Lunar New Year holiday to keep millions of people from traveling back to work and speed up transmission of the disease. Shanghai and Guangdong province, a thousand kilometers from Wuhan, have reportedly told companies to wait until Feb. 10 to resume operations after the holidays. Even then, it is likely that tens of millions of migrant workers who went home for the holidays will wait for the epidemic to die down, and avoid the crowded trains and buses back to their workplaces at this time.
The drastic measures taken by China could help arrest rapid transmission of the virus and spreading the illness widely. But transmission may be much faster and wider for the economic impacts of the sudden halt in economic activity in Hubei’s industrial centers, and cessation of work by millions of the province’s workers. And it’s not only factories and public facilities like transport that have stopped work. The Economist reports that almost all of the country’s 11,000 cinemas remained closed over the new year holidays, normally a peak season for moviegoers. The Shanghai Disney Resort was likewise closed, just when it could have capitalized on its famous mascot to generate even more business in the new Year of the Rat (for which the Chinese term, like our own word “daga,” also refers to a mouse). Meanwhile, several countries, including the Philippines and United States, have stopped inward airline flights coming from China, a move that will directly impact on their own economies.
But the indirect impacts of China’s closures and work stoppages could well be more damaging, as these would permeate worldwide. The lockdown in Wuhan, a key manufacturing hub in China that hosts large automakers Honda, Nissan, and General Motors, as well as the world’s largest producer of optical fibers and cables, will surely make a major dent overseas. Countries that depend on large amounts of raw material exports to China like minerals and ores to feed its factories (the Philippines being one of them) will similarly incur a deep hit.
All told, the International Monetary Fund has estimated that global GDP growth will lose one percentage point if China’s economy sees zero growth. Some analysts already expect China’s GDP growth to plummet from 6 to 2 percent this year. China is indeed in for a rough ride, and we will all feel the bumps, too.
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