Restaurants, sporting events, and other services will also face significant disruption. Similarly, shares of major hotel companies have plummeted in the last few weeks, and entertainment giants like Disney expect a significant blow to revenues. The International Air Transport Association warns that Covid-19 could cost global air carriers between $63 billion and $113 billion in revenue in 2020, and the international film market could lose over $5 billion in lower box office sales. As a result of depressed activity, the United Nations projects that foreign direct investment flows could fall between 5 and 15 percent to their lowest levels since the 2008-2009 global financial crisis.Īt the sectoral level, tourism and travel-related industries will be among the hardest hit as authorities encourage “social distancing” and consumers stay indoors. Major European economies will experience dislocations as the virus spreads and countries adopt restrictive responses that curb manufacturing activity at regional hubs, including in Northern Italy. Among major economies outside of China, the OECD forecasts the largest downward growth revisions in countries deeply interconnected to China, especially South Korea, Australia, and Japan. Q2: What sectors and economies are most vulnerable?Ī2: The Covid-19 outbreak has generated both demand and supply shocks reverberating across the global economy. Estimates of the global impact vary: early last week, the Organisation for Economic Co-operation and Development (OECD) predicted that Covid-19 will lower global GDP growth by one-half a percentage point for 2020 (from 2.9 to 2.4 percent) Bloomberg Economics warns that full-year GDP growth could fall to zero in a worst-case pandemic scenario. While the United States entered the crisis with a tailwind, some analysts are forecasting a contraction in U.S. Europe and Japan are likely already in recession territory given their weak fourth quarter performance and high reliance on trade.
Infections are mounting in Europe, South Korea, Iran, the United States, and elsewhere, with authorities implementing increasingly restrictive measures to contain the virus. As Covid-19 spreads, China’s economic recovery will be challenged as demand from other countries drops as they cope with the virus.Īlthough the outbreak appears to have slowed in China, Covid-19 and its impacts have gone global. Analysts have sharply revised down estimates of Chinese growth, with many now predicting a drop in first quarter GDP, the first contraction since China began reporting quarterly data in 1992. The official data confirmed a widespread slowdown in economic activity foreshadowed in low pollution levels and depressed shipping traffic, among other informal barometers. Surveys of China’s manufacturing and services sector plunged to record lows in February, automobile sales sank a record 80 percent, and China’s exports fell 17.2 percent in January and February. Q1: What will be the impact of Covid-19 on the economy?Ī1: The extent of the damage will depend on how quickly the virus is contained, the steps authorities take to contain it, and how much economic support governments are willing to deploy during the epidemic’s immediate impact and aftermath.Įarly indications of Covid-19’s impact on the Chinese economy are worse than initially forecast. The increased uncertainty has led to financial market volatility last seen during the global financial crisis. A decision by two of the world’s largest energy producers to maintain current levels of production, despite falling energy prices, has further unnerved investors while questions about governments’ abilities to mount an effective and coordinated response linger.
The virus’s spread has regrettably borne out analysts’ downside scenarios, with investors digesting the implications of disrupted supply chains, official containment measures, and spillovers from the real economy to financial markets. What was initially seen as a largely China-centric shock is now understood to be a global crisis. While over two-thirds of the total confirmed cases are in mainland China, the vast majority of new cases reported since February 25 have occurred outside the country. Responding to Egregious Human Rights AbusesĬonfirmed cases of the novel coronavirus (Covid-19), which first appeared in China at the end of last year, now exceed 115,000 as of March 10 and are likely to climb significantly higher.Building Sustainable and Inclusive Democracy.Family Planning, Maternal and Child Health, and Immunizations.
Energy, Climate Change, and Environmental Impacts.Weapons of Mass Destruction Proliferation.Defense Industry, Acquisition, and Innovation.Intelligence, Surveillance, and Privacy.