Losses of $ 160 billion .. Bloomberg: Corona virus deal a severe blow to the global economy

The US Bloomberg News has painted a grim picture of the fallout from the deadly Corona epidemic on the global economy. The news agency stated in a news report that the interconnected global economy is beginning to feel the impact of the outbreak of the Coruna virus and the possibility of it being hit by a loss of $ 160 billion.

The virus appeared last December in a market in Wuhan, in central China. Initial research indicates that the virus was transmitted to humans through snakes.

Since the last health crisis in China caused by the outbreak of severe acute respiratory syndrome (SARS) of animal origin in 2003, its share in world economic output has quadrupled at a rate of almost 17%.

Bloomberg notes that China is now the largest market for new and semiconductor cars, the largest spending country in global tourism, and the main source of clothing and textiles. It is also the country where many types of electronic devices are manufactured.

However, the blow to the global economy from the outbreak of the new Corona epidemic may be three or four times greater than the blow to the outbreak of the SARS disease estimated at $ 40 billion, according to Professor Warwick McCain, Professor of Economics at the Australian National University.

shock
So far, according to a Bloomberg report, China has absorbed the economic shock caused by the Corona epidemic, which has killed more than 210 people within China’s borders and infected more than 9,950 people worldwide.

The agency quoted in its report, Miguel Patricio, CEO of the American food company Kraft Heinz, saying that everyone is waiting for the developments of the current crisis.

Patricio adds that the danger is that the new epidemic may continue to spread and people will have to stay indoors, which means that problems arise for companies in the areas of distribution and production.

Bloomberg notes that Levi Strauss and his jeans company partners closed the doors of its flagship store in Wuhan, which it opened four months ago.

The agency noted that international companies had rushed to open stores and exhibitions in the Chinese cities of Beijing and Shanghai, such as the American Estee Lauder for cosmetics, Canada Goose, a Canadian company holding winter clothes, and Rolls-Royce Motors, a British multinational company.

And companies that have a lot of promotion in China - such as Starbucks and Tesla - declined to predict how the virus will affect demand forces this week. As for Apple and Microsoft, they revealed broader expectations than usual for the first quarter, amid uncertainty over the impact of the virus.

Bloomberg says the first wave of impact on the global economy from the virus is at a critical time. Western companies have contributed to turning China’s Lunar New Year celebrations that take place in late January of each year into an abundant profitable shopping event, until it has become a pivotal period for the country's economic growth.

But it is no longer this year due to the Coruna epidemic, as Bloomberg estimates that consumption in the first quarter will slow by more than half in China from the rate recorded in the last months of 2019, which amounted to 5.5%.

This decline is evidenced by the fact that Starbucks closed more than two thousand outlets throughout China, half of its number in that country. McDonald's also closed hundreds of its restaurants, while goods at some Walmart retail stores began to run out.

Consecutive closures
Meanwhile, Disneyland theme parks closed in Shanghai and Hong Kong, while the United States and Japan advised their nationals to avoid traveling to China, and some airlines reduced their flights to that country not for fear of infection but for the few willing to travel.

Bloomberg expects the Corona epidemic to have a broad impact on the technology industry, with China accounting for 21% of global IT spending.

Some of the major manufacturers of personal computer hardware and parts suppliers are based in China. If a slowdown occurs, it would reduce the demand for Microsoft Windows operating system software.

And it uses more than 50% of the electronic chips valued at about 470 billion dollars, either in devices sold in or supplied to China, in order to put them in equipment or supplies in preparation for selling them around the world.

And US Secretary of Commerce Wilbur Ross told Fox Business that the outbreak could prompt more companies to transfer their manufacturing industries to the United States and Mexico.

Melissa Xu, director of the auto parts factory of ED Opto Electric Lighting Company in east China's Xinjiang, believes that the emergence of the new virus may be a bigger blow to them than the trade war between the United States and China.