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Coronavirus And Its Global Economic Impact : A Possible GD-PI-WAT Topic

Feb 10, 2020 | 9 minutes |

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If you want to prepare yourself for the interview, then you will have to be aware of things not just in your country but the world too. And in this case your neighbouring country. There is a lot of stuff happening in China. Since last year to January 2020, it was the US-China Trade War. Now its the outbreak of Coronavirus that originated in Wuhan district of China. All these will have a significant impact on the world economy and geopolitics too. Hence, this is a possible GD-PI-WAT topic. Learn everything about the topic in this article and form an opinion that can lead you to the door of your dream b-school. 

What Is Coronavirus?

Coronaviruses (CoV) is a part of a family of viruses. The illness can be anything from the common cold to severe diseases such as Severe Acute Respiratory Syndrome (SARS-CoV) and Middle East Respiratory Syndrome (MERS-CoV). The novel Coronavirus (nCoV) is a new type of strain that was not identified in humans previously.  Coronavirus is zoonotic in nature, which means it can be transmitted between animals and people. There are various other types of known coronaviruses circulating in animals that have not infected humans, yet. Signs of this infection include respiratory symptoms, cough, breathing difficulties, fever, shortness of breath and other respiratory symptoms. In chronic cases, the infection can lead to pneumonia, acute respiratory syndrome, kidney failure and even death.  *This information is as per WHO website.

Why Has WHO Called Coronavirus A “Global Health Emergency”?

In 2002, lethal pneumonia-like virus - SARS emerged from China. After 17 years another potentially lethal virus is spreading fast in the world’s most populous country. The virus originated in the Wuhan (the manufacturing and logistics hub of the country) wildlife wet market and has resulted in 210+ deaths and 10,000 confirmed cases of infection in 19 regions of China and 98 cases around 20 countries around the world, but no deaths yet. Most international cases are from people who have travelled to Wuhan, Hubei province of China. However, there are eight cases in Germany, the United States, Japan and Vietnam - patients never visited the place but got infected by people who travelled to China. Hence, "The main reason for this declaration is not what is happening in China but what is happening in other countries," says WHO Chief - Tedros Adhanom Ghebreyesus.

Global Economic Impact 

The new year seemed like a ray of hope as the US and China put a tenuous pause to the trade war. The European market remained stable, and Germany (the continent’s largest economy) somehow escaped the possibility of a recession. However, the outbreak of Coronavirus is making the world worry again. Many say that this can lead to global economic slowdown. But, how can one country affect the global economy that bad? Well, that’s because China is the ‘world’s factory,' hence a principal element of the world economy. Wuhan, the manufacturing and logistics hub of China, is both the epicentre and most impacted by the virus. There are, in total 384 production sites, 89 research and development facilities, 27 logistics sites and 15 administration facilities in Wuhan alone.  Hence, the province’s lockdown is bound to have a major impact on the rest of China and the world. 

Companies

International companies that rely on Chinese manufacturing for production, distribution and sales in China are already facing many costly problems. Some of them are - 

Stock Market

 Many investors moved their stocks on exchanges from Asia to Europe to North America, thus shifting their money to traditional safe havens. This has pushed up the value of the dollar, yen, and gold. They even pushed down the oil prices over the fear that weaker economies might spell less demand for fuel. Stocks in Europe and Japan fell more than 2%. In New York, the stock of S&P500 was down 1.6%, along with other companies whose sales are dependent on China especially. Wynn Resorts, that operates casinos in Macau dropped more than 8%.

Industries

The travel restriction has hit both the tourism and supply chain industry very severely. Some deliveries will get disrupted, while others will become more expensive. The entertainment business will also take a huge hit. China’s Disney world has already started experiencing that effect.  IMAX, a large screen film company of Toronto, postponed the release of 5 films which were to be showcased in China during the Lunar New Year holiday. The closedown of factories has hit the automobile, apparel and tech industry very badly. 

Countries

Apart from America, Europe, etc, smaller countries near China like - South Korea, Vietnam, Malaysia, etc who are dependent on China logistically will also suffer a huge hit. 

Who May Benefit From This?


Where Does India Stand?


Important Questions To Expect In The GD-PI-WAT Process

  1. Many are comparing SARS (a respiratory disease also originated in China) with Coronavirus when it comes to stinging the global economy. What is your take?
  2. Will Coronavirus hasten the process of the global economic slowdown?
  3. Is India economically ready to battle Coronavirus?
  4. First trade war and now coronavirus. How badly will it hurt the global economy?
  5. SARS and 2019-nCoV (coronavirus) both are a respiratory disease is the manufacturing hub of the world - China. Is the manufacturing industry to blame?

Other Important GD-PI-WAT Topics (check now)

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The US-China Trade War Explained
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Article 370 And Article 35A
Venezuela's Oily Hyperinflation Story
The Zomato-Uber Eats Deal Explained
Why Should India Be Friends With Its Neighbours?
All You Need To Know About Air India
Opting Out Of RCEP - Does India Need To Rethink Its Decision?


Reading material on Coronavirus
  1. SARS Stung the Global Economy. The Coronavirus Is a Greater Menace.
  2. Fears of global economic slowdown as the virus follow trade war
  3. Coronavirus: Could it damage the global economy?
  4. Charting the Global Economic Impact of the Coronavirus
  5. Coronavirus Impact on Manufacturing and Shipping from China
  6. The coronavirus is just starting to have an impact on the globe’s economy and politics
  7. Mapping the Coronavirus Outbreak Across the World
  8. Coronavirus brings more bad news for India’s beleaguered economy
  9. Coronavirus in India: how the 2019-nCoV could impact the fast-growing economy