You’ve seen the public health warnings on TV, and you might have noticed empty spots on your local grocery store shelves. But how much is the coronavirus outbreak really expected to impact the economy? Is remembering to wash your hands your biggest worry right now?
Consider the numbers. For a little perspective, it might help to consider the numbers. The virus has infected more than 114,000 people out of a worldwide population of 9 billion. Deaths from those infections have totaled around 4,000. Yes, even one death is a tragedy, but these numbers suggest a strong survival rate.
It’s not so much the infection rate or deaths that are impacting the economy, but the preparations and warnings that many governments are making. Public health officials are endeavoring to release accurate information, along with tips on how to stay safe, but without triggering unreasonable panic.
Production is slowed in China. Yes, the effect of quarantines and factory closures in China has led to slowed production. The effects of certain shortages have begun to reach other countries; for example, basic supplies and even packaging are necessary for factories in other countries to reach production goals. Shipments are late, so stores are running short on some products.
School closures. Concerned about containing the outbreak and protecting this summer’s Olympic Games in Tokyo, Japan made the call to close all public schools for several weeks. Undoubtedly, this action will ripple outward into the general economy, as parents juggle work as childcare is suddenly lacking. Other countries are also considering similar moves in order to slow the outbreak and protect children.
The impact on our economy. In the US, we expect to lose 5.8 billion from the tourism industry alone, which relies heavily upon Chinese visitors. Other industries will see varying effects; some due to true shortages, others due to panic buying.
Impact upon the global economy. Overall, analysts predict a 1.1 trillion dollar loss to the global economy, or about 1.3 percent of global growth this year.
Yes, we face a challenge ahead. But it’s important to hold onto perspective; other outbreaks have come and gone, and our economies survived intact. If you feel concerned about your financial outlook with regard to the coronavirus threat (or just in general) remember that you can always call us to schedule an appointment to review everything.