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"Coronavirus contributes to uncertainty and that is never good for the market"

2020-01-27T18:16:17.145Z

The European stock markets plunged into the red on Monday, triggered by concerns about the spread of the corona virus and its economic impact. The comparison with 2003, when the SARS virus spread, was quickly made.



The European stock markets plunged into the red on Monday, triggered by concerns about the spread of the corona virus and its economic impact. The comparison with 2003, when the SARS virus spread, was quickly made.

"SARS did have an impact in the short term," says Marijke Zewuster, head of emerging markets at ABN AMRO's economic office. "You saw that a bit in the economic growth figures for the quarter in which it played. But on the total you hardly saw that."

Economic growth in China in 2003, the year in which SARS seized itself in Asia, amounted to 3.1 percent compared to 1.7 percent a year earlier. Zewuster: "China and the region just broke away from the Asian crisis at the time. SARS had a small dip, but then the growth spurt came."

According to the economist, the tricky part of these types of effects is that you never know what would have happened if there had been no SARS. The same applies to the corona virus. "You cannot experiment in economics."

A crisis often produces activity

Moreover, a crisis often produces economic activity. "After an earthquake, houses are built or repaired. Even now with this virus, it does work because hospitals are being built."

But the consumption of the people in the affected region is naturally decreasing and they are not traveling either. "The Chinese economy has become much bigger than at the time of SARS," says Zewuster. "They have become more important as an economic factor on the world stage. As a result, any slowdown in growth there will also have a greater impact on the world."

In any case, people - and in particular investors - do not like uncertainty. "Just as the trade war between China and the US seems to be slowing down, this virus is breaking out. The investor immediately thinks: what's next ? So it contributes to uncertainty and uncertainty is never right."

Source: nunl

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