Coronavirus outbreak has got worldwide and many countries are fighting hard to prevent this virus from spreading more. Lockdown has been imposed in most of the countries where the virus is spreading quickly. With more than 19 lakh positive cases and 126k deaths all over the world, this COVID-19 virus is spreading more and more and is not going to end any soon.
This leads to a world at a standstill with the economic growth of the various countries getting plummeted due to the production stop of manufacturing units and trade cancellations. Only the production of the essential commodities is continued while all other things are no longer manufactured amid the strict lockdowns.
Impact on China’s Economy Due to Coronavirus
China, the country where all it started has seen a worse period in the first quarter. Though only Wuhan was affected by the Corona epidemic amongst all the cities, the economic impact was to be faced by the complete nation.
To and fro flight cancellations from China, import/export cancellations, stop down of manufacturing plants were the result of the Corona epidemic. Though the factory suspension measures reduced the economic growth of China, it helped the management to stop the further spread of the virus and control the positive cases.
China, the world’s second-largest economy has been exporting a lot of its items to the world and now has seen a steep in the demand for exports during the first quarter of 2020.
Exports of China have fallen 14% in March which is huge, hope to see the rise for China’s exports in the next couple of months as the government can successfully control the reduction of the number of positive patients in Wuhan.
Imports in China have also decreased to 9.5% from a year earlier. WTO has forecasted that the proportion of trade would plummet even more this year than the 2008 economic crisis. The import/export trade of China is badly affected and it will lead to the firing of the workers in the next couple of months seeing the worst phase of the world is going through.
Even though everything gets well in China in April, it is not expected that the demand for export and import will be increased any further seeing the critical situation of the other countries of the world.
The Ministry of Commerce, China has shown the difficulties faced by the exporters currently in the country where there is a sudden plunge for the overseas orders and so there is a logistics logjam. Many countries are avoiding trade at this time to curb the spread of Corona so the movement of people and the trade activity seems very low.
If the Western countries get a quick recovery from this outbreak then we can think of the trade numbers getting back to normal and slowly increasing. I hope the foreign demand from the US market and the European market gets back to the normal stage to have a global trade balance.
Even though there was some improvement in the economic activity in March, GDP growth will contract by 10% as compared to the earlier year in China. Many Investment banks, financial and economic experts of China have raised the concern for the current and future state of the country and have speculated that the second-quarter GDP growth won’t be that good.
It is to be noted that China’s economy sharply contracted for the first time after 1992. After this, when the virus got widespread across the world, the economic recession came to most of the countries and will be kept going until Corona lasts. This is going to bring a global economic recession that will be similar or worse than the 2008 economic recession.
Many financial reports show that there will be many layoffs in the upcoming months all over the world; while many companies already firing the employees at this time.
As per the forecast done by the experts, it is expected that the growth of China’s economy will be near to the 2.0% mark which is very low as compared to the 6%-mark last year. The 2% mark will be the lowest in 40 years.
Also, analysts expect that there will be 30 million job losses this year in China. This will be even more than the 2008 financial crisis that leads to 20-plus million layoffs. This way we can see that Coronavirus impact on China is huge and it will take some time for the country to get back to a normal stage.
I hope to see an end to the pandemic soon so that the global economy can proliferate once again. After the positive cases are on control worldwide, we can expect the closure of the lockdowns and the markets opening once again eventually leading to a slow but steady global economic growth. Till then, stay at home and be safe. For more information, visit Financeshed.