Does coronavirus threaten the global economy?

Does coronavirus threaten the global economy?

The epidemic cut off the world's largest economic power, i.e. China, which suddenly disappeared along with its economic potential, its factories, export orders and the demand for raw materials.

In economic terms, coronavirus unexpectedly hit the global economy on both the demand and the supply side. There was also a collapse on the Chinese consumer goods market. In February, sales in Chinese restaurants dropped by 60 to 70%, and in stores by up to 70 to 80% counting only those open. Given that some stores and restaurants are still closed, the overall decrease in sales is greater.

According to experts, the spreading coronavirus epidemic in China is beginning to have an increasing impact not only on China but also on the global economy. A prolonged interruption in China's activity may result in disruptions in the chemical products, transport equipment, textiles and electronics industries. In Hubei, the most important industries are: chemical and non-metallic mineral products (22% of gross industrial production in the province) and transport equipment (18%). The economic sectors most vulnerable to decline are: textiles, automotive and electronics.Taiwan is the top five economies most dependent on China (5% of local production uses Chinese means of production), South Korea (4%), the Netherlands (3%), Hungary (3%) and Indonesia (3%). Major indices on West European stock exchanges are strongly losing. DAX in Germany decreases by 3.66 percent, CAC 40 in France - 3.64 percent, FTSE 250 in Great Britain - 2.81 percent, and FTSE MIB in Italy - as much as 4.36 percent.

fall chart

In Poland, WIG 20 at the opening on Monday lost 0.86 percent. At around 11.00 the index has already decreased by 3.21 percent In response to growing investors' fears about the impact of the coronavirus epidemic on world demand, raw oil prices are also significantly lowering in the US. The West Texas Intermediate oil barrel in deliveries for April at the NYMEX New York Stock Exchange is valued at $ 52.21, after price reduction by 2.17% Brent oil for April supplies at the ICE Futures Europe London Stock Exchange is valued at $ 57.15 a barrel, down by 2.31 percent. Copper on the LME metal exchange in London is cheaper by over 1 percent All industrial metals lose their value. In metal markets, inventories are growing, among others copper, nickel, zinc and steel due to a decrease in demand for raw materials, which is associated with lower economic activity, especially in China, caused by a coronavirus epidemic. Gold, traditionally considered a safe haven by investors, is valued at $ 1,899.75 per ounce. This level has not been seen for over 7 years.

As calculated by experts from the Polish Institute of Economics, coronavirus can reduce the rate of growth of Polish GDP and cause a decline in employment in many sectors of the economy. Poor prospects also appear before the frankers. Due to the coronavirus, a reduction of the economic growth rate of Poland in 2020 by approximately 0.02 percentage points can be expected, the production of machinery and equipment, mining and mining, the production of electrical equipment, the production of motor vehicles and the production of metal products are at risk.

In Europe, we have few cases of Coronavirus among others in Germany, France, Great Britain or Spain. However, the most worrying are data from Italy. Over 200 coronavirus cases have been reported there, of which 165 in Lombardy alone. Five infected people have died. The Consulate General of the Republic of Poland in Milan posted on Twitter the following appeal to Poles on Sunday: "In connection with the increase in coronavirus incidence in northern Italy, we are asking our compatriots living and staying in Italy to comply with the recommendations of the Italian services and to take precautions."

The situation caused by the coronavirus in Italy is also concernedFrench Health Minister Olivier Veran said it is very likely that new coronavirus cases will appear in his country. He also noted that French healthcare is prepared in the event of an epidemic. He also admitted that he was closely watching the situation in Italy. In an interview with the newspaper "La Parisien", Veran said that currently there is only one person infected with the virus in France. She is being treated in a Lyon hospital and her condition is not worrying. Other infected individuals who were found to have coronavirus left the hospital and did not become infected. The only fatal victim is an 80-year-old man. The Minister of Health also announced that the number of French laboratories that will be equipped with diagnostic tests will be increased so that several thousand tests can be carried out in France every day. Currently, the productivity is at the level of 400 per day. In addition, 70 more hospitals were prepared to receive and treat patients with coronavirus. Until now there were 38 of them and they were mainly university or specialized hospitals. Now their number has risen to 108.