US Report: Corona Virus Spreads Economic Depression Worldwide

Supply chain turmoil has caused global market disruptions, particularly in Asia.

In a report in the American magazine "Foreign Policy", author Keith Johnson said that the successive economic impact of the outbreak of the new Corona virus in China has become more tangible all over the world.

Apple's sales forecasts have fallen due to supply chain turmoil, which in turn has slowed global markets and lowered Asian governments' growth prospects. Meanwhile, German investor sentiment was falling amid growing concerns that the widespread spread of the virus would hamper the emerging recovery of global manufacturing.

The repercussions of the virus outbreak and China's efforts to contain it came at a very bad time for the economies of countries such as Japan and Germany, which just started recovering after a year marked by many global trade turmoil which in turn affected their industries and exports. The virus also adversely affected the global auto industry, with repercussions affecting Japan, South Korea, Germany and possibly even the United States.

The author stated that, despite China's insistence on stabilizing the rate of new infections, as well as telling her that its citizens are returning to normal activities earlier this month, the economic damage left by the virus appears clear within China.

Some sectors, such as the automotive industry, remain stalled as factories suffer from absenteeism and a significant supply chain shortage. Other sectors such as mining, travel, construction, and retail also took a big hit because Chinese consumers and workers, who were imposed travel restrictions and feared infection, stopped most of their regular activities.

"It seems increasingly likely that this February will be an economic blow to China," according to a memo from the advisory group Wood Mackenzie. Most forecasters expect the growth of the Chinese economy to slow in the first quarter of the year before recovering thanks to the incentives the government will provide later in the year.

The writer pointed out that sentiment regarding growth prospects in China is deteriorating. In this regard, a new survey by Bank of America fund managers shows that large investors expect Chinese GDP growth rates to stabilize at just over 5% annually over the next three years.

According to consulting firm Wood Mackenzie, it is likely that it will be difficult for the Chinese economy to recover quickly despite efforts by Beijing to boost lending and lower interest rates.

Besides, the SMEs were supposed to continue to pay the salaries of absentee workers during their closing period, but many of them will not be able to pay salaries due to their shrinking revenues. This means lower income available to consumers. This will lead to converting the temporary pause in the ratio of domestic demand for consumer goods to a possible permanent destruction of the demand base.

Asian economies
The writer emphasized that although most viral infections and deaths occur within China, the economic consequences are becoming increasingly evident among its Asian neighbors. Against this background, South Korean President Moon Ji-nn basically declared an economic emergency on Tuesday, and called for measures to reduce the damage to China's economy.

For its part, Singapore has lowered its growth forecast this year and plans to provide a multi-billion dollar stimulus package to offset the losses in economic activity. Thailand and Malaysia also lowered their growth forecasts.

Malaysia plans to take economic incentive measures to contain the damage. In contrast, Japan, with the most HIV cases outside China, is likely to face even greater challenges after its economy slowed in the last quarter of the year.

The writer pointed out that Japanese automakers such as Toyota and Nissan witness production disruptions in both Chinese and Japanese factories, given the paralysis in Chinese tourism at the present time. This would increase the risk of a recession in Japan, which launched a massive economic stimulus package late last year, and may need to pump more money to avoid a full crisis.

America and Europe
The writer pointed out that Chinese companies working on projects "One Belt One Road" around Southeast Asia will incur heavy losses due to delays and high costs caused by the failure of the supply chain and workers being cut off from their activities.

Brazil, which relies on the Chinese market as its largest trading partner, is likely to see a slowdown in growth this year due to the implications of the disease.

The slowdown is likely to hamper US plans to significantly increase exports of agricultural products, energy and manufactured goods to China. On the other hand, the percentage of production of European car manufacturers, such as Volkswagen, was affected, especially in factories located inside China.

There are now growing fears of additional disturbances in the supply chain that could adversely affect European factories.