COVID-19 SPREAD DEEPENING ECONOMIC FEAR.

Byline: NAZIR AHMED SHAIKH

The governments and central banks world over readied more emergency measures to tackle the economic impact after spreading coronavirus on Friday, helping financial markets pare some of their steep losses, while more major events were canceled or postponed. US president even declared national emergency and set $50 billion fund to tackle the contagious disease. Till date (Friday March 14) about 138,000 people are affected worldwide and over 5,000 died, according to available reports.

Experts warn that due to a lack of testing and unreported cases, many more people may be affected by the outbreak that emerged in the Chinese city of Wuhan late last year and now almost all world countries are lockdown for trade, travelling, gathering, even schools and institutions and public places are closed making fear of economic loss.

IMPACT ON MAJOR ECONOMIES

Economists are looking at coronavirus outbreak in context of SARS epidemic of 2003. The SARS epidemic is estimated to have slashed 0.5 percent to 1 percent off of China's growth that year and cost the global economy about $40 billion (or 0.1 percent of global GDP). In that year China's economy accounted for roughly 4 percent of the world's GDP; which is now 16.3 percent. If the coronavirus has a similar effect on China as SARS, the impact on global growth would be worse. Moreover, after years of rapid economic development, China's growth is weaker than it was in 2003. Currently China's growth stands at 6 percent, the lowest it's been since 1990.

The coronavirus spreads more quickly than SARS, but, so far, seems to have a lower mortality rate. For its part, China responded more quickly to the coronavirus outbreak than it did with SARS, employing unprecedented confinement measures in areas such as Wuhan. The economic upshot from the coronavirus could clang China's economy further and reduce global growth.

In China, which is a month ahead of the rest of the world in terms of the outbreak, a survey of purchasing managers shows that manufacturing output in February sank to its lowest levels since factory bosses were first surveyed in 2004. It seems likely that GDP would shrink down in the first quarter, for the first time since the death of Mao Zedong in 1976.

With the spread of the coronavirus, the United States is facing a potential "black swan event" - an extremely rare and unpredictable incident that has potentially severe consequences. While the human cost of the...