Economists: Corona virus threatens the future of globalization

Corona residues threaten the future of globalization, and economic experts point out that in the long run, coronavirus infection will spread in the economic field from China to the rest of the world, stressing the negative financial implications of the epidemic that has killed at least 1700 people and infected nearly 70,000 .

And writer Brendan Cole stated in a report published by "Newsweek" that the encirclement of the borders over Chinese lands during the new year due to the outbreak of the epidemic, caused great damage to the country's economy, as the doors of factories were closed and the wheels of production and the workers' cap in the homes were disrupted.

According to the "Financial Times", it was established that, according to the investment bank "Nomura", growth expectations in China during the first quarter witnessed a retreat of 3%, compared to the fourth quarter of last year. This quarterly decline in GDP growth is the most prominent event since the Tiananmen demonstrations in 1989.

The threat of globalization
In the same vein, chief economist at research firm Capital Economics, Neil Schering, warned of signs that the economic turmoil in China was spreading to other countries.

Referring to the biggest slowdown in Chinese exports to South Korea since the financial crisis in Asia in 1999, Schering said that the prolonged encirclement in China may mean that the outcome of the losses incurred by production will never recover.

The shortage of component parts due to the closure of factories in China leads to a reassessment of large and complex supply chains, and if the stone blocking over China continues, this will lead to more severe consequences, as it is not easy to assess the economic effects of the Corona virus over the next ten days, let alone The next ten years.

"But it is possible that, regarding politics and technology, we may soon have to add the threat of global epidemics to the list of factors that threaten the future of globalization," Schering wrote in an editorial on the research firm's website.

In comments to Newsweek, Schering added that companies will question the benefits of maintaining supply chains in their current scope.

He stated that maintaining these chains depletes the capital of companies, as the economy had a meaning in the world of free trade and without alternative technologies, but the move towards more concentration of trade barriers, not to mention new technologies that enable companies to reshape some aspects of the production process, may mean that Companies will shorten supply chains.

The risk of disruption caused by epidemics or natural disasters will reinforce the triggering reasons for transformation, and all this will indicate that production is becoming more local or perhaps more regional.

Governmental procedures
The Chinese central bank has announced plans to pump 1.2 trillion yuan ($ 173 billion) into the market to stabilize asset prices, and the Chinese Qiu magazine reported, citing Chinese CNBC station, that it also plans to make cuts Tax and increase government spending.

In comments to Newsweek, senior analyst at Xanti investment broker Matthew Henman added that investors in China are at a "crossroads" about the measures to be taken.

"The Chinese speech is committed to doing what is required, but that may not be enough, and monetary policy makers all over the world will not be able to prevent shocks to the system that the Corona virus will leave behind," Henman said.

Earlier this month, Alicia Garcia Herero, chief economist for the Asia-Pacific region at the Natixis Investment Bank, made statements in an interview with Newsweek magazine in which she confirmed that the Corona virus would harm the Chinese economy more than the SARS virus did in 2003, This is because of its 17-year growth and its shift towards investment in the services sector, away from dependence on manufacturing.