Corona Virus .. Foggy with the global economy and corporate losses exacerbated

Senior European Central Bank officials said on Wednesday that an outbreak of the new Corona virus in China may increase the atmosphere of uncertainty in the global economy, but its damage may be short-term and temporary, which reduces the need for policy action.

This comes at a time when the Coruna virus continues to harm many sectors, including the automotive and airlines.

The virus has killed nearly 500 people and disrupted business activities in and around China, raising fears that its damages to the world's second largest economy could spread around the world.

"While the threat of a trade war between the United States and China appears to have receded, the Corona virus adds a new layer of uncertainty," said Christine Lagarde, head of the European Central Bank, speaking from Paris.

But Philip Lin, chief economist of the central bank, argued that the impact of epidemics on growth is often short-lived and that economies are recovering in their wake.

"We may see a big impact, but what is important for monetary policy - where our view is for the medium term - is that we will be less concerned about temporary shocks unless this turns into a long-term distortion of the global economy," Lin said in Berlin.

"The history of (previous epidemics) states that there may be a significant impact in the short term of developments like these, but they do not last in the long term," he said, explaining that the SARS outbreak in 2003 and other epidemics is the natural criterion for the analysis.

For a long time, the European Central Bank has been warning of global risks overshadowing the economic outlook for the euro zone, but it seemed more optimistic in the recent period, saying that the risks seem to be easing, which led investors to reduce their expectations for more monetary easing.

The aviation sector is losing
Meanwhile, the virus has disrupted air travel as more than 20 airlines have announced suspension or curtailment of flights to China, while other countries, including the United States, have banned anyone from China over the past two weeks.

In Hong Kong, the national airline "Cathay Pacific Airways" asked its 27,000 employees to take an unpaid vacation for three weeks, saying conditions were as dire as they were during the 2008 financial crisis.

American Airlines and United Airlines announced the suspension of all flights to and from Hong Kong after the end of this week, in a move that means that there are no longer any American airlines to carry passengers to the city that is a financial center in Asia.

And in a less intense tone, the CEO of IAG, the parent company of British Airways (British Airways), said the new Corona virus epidemic would have only a marginal impact on global travel demand, and that the aviation sector was robust enough to absorb a major downturn in the economy Chinese.

Factories stop
The Chinese stock market lost nearly $ 700 billion in value on Monday, with several factories closing their doors, isolating cities and imposing travel restrictions, which fueled concerns about global supply chains. Asian stock markets stabilized somewhat on Wednesday.

Hyundai Motor will suspend production in South Korea, where its largest manufacturing bases are, becoming the first major automaker outside China to make the move after parts supplies are disrupted by the outbreak of the Coronavirus.

A large number of global car manufacturers, including Hyundai, Tesla, Ford, Peugeot Citroen, Nissan and Honda Motor, have already suspended work at some of their factories in China this week in line with government instructions.

Airbus aircraft maker said it had suspended the final assembly line for its aircraft in Tianjin, China.

Reuters quoted a person familiar with the matter as saying that the Taiwanese company Foxconn, which makes Apple smartphones and other brands and that suspended production in China "almost completely," aims to restart its factories in China next week, but it may take a week or two or more To fully resume production.

The German company, Adidas, for the manufacture of clothes and sports equipment, also said it would temporarily close a "large" number of its warehouses in China.

White House economic adviser Larry Kudlow said the virus would delay the prospect of prosperity for US exports to China as a result of the first stage of the trade agreement between the two countries.