What Impact Does the Coronavirus have on Global Business?
The potentially lasting effects of the Coronavirus, like those of the early-aughts SARS outbreak and the early-2010s’ avian-flu scare, are being felt not only in China, but across the globe.
Originating in Wuhan, China, a city with a population of more than 10 million people, Coronavirus has kicked off a fast-spreading epidemic in the heart of Chinese manufacturing.
That location has resulted in ripple effects throughout the global economy as businesses that rely on Chinese manufacturing scramble for answers and investors and forecasters have a finger on the world economy’s proverbial panic button.
What outcomes and impacts are most likely in the wake of the disease?
Manufacturing Receives a Gut Punch
Though recent trends regarding the U.S. Institute for Supply Management seemed to suggest a renewed manufacturing boom – or at least a return to growth after a lengthy slowdown, the Coronavirus outbreak has thrown a China-sized wrench squarely in the middle of that progress.
Major players across a variety of industries are feeling the effects – from the actual act of shipping goods around the world to impacts on the oil and gas, construction and steel, and automotive industries, among others, manufacturing’s contraction is almost certain to put a hefty squeeze on the world’s production and transportation capabilities.
Tech, Even Among Giants, Hit Hard
In particular, the technology sector could be left reeling from the lengthening shuttering of Chinese production.
Apple has already closed all of the company’s offices and stores in China through Sunday, and factories for both the American tech giant and other major players could follow suit depending on the continued severity of the outbreak.
Analysts at Goldman Sachs predicted a 1.6-percentage-point drop in China’s first-quarter GDP growth, and a recommendation from the U.S. Centers for Disease Control and Prevention has spurred employers as large as Microsoft, Facebook and Amazon to implement various restrictions on travel in recent days.
Like companies across all the industries impacted by the outbreak, tech companies will be left scrambling for replacement manufacturing solutions if they mean to keep up with demand and avoid skidding off the road entirely.
The Global Economy Is in Flux
China’s central bank has already pledged to pump an enormous sum of money into the country’s economy in a last-ditch attempt to head off the worst of the disease’s financial impact, and markets around the globe are reacting negatively to the uncertainty surround the outbreak.
In the U.S., stocks are rebounding as a result of this attempted stimulus, as investors saw the DOW Jones Industrial Average balloon more than 400 points to fight back against recent dips related to the disease.
If previous American market reactions to similar outbreaks, which have been largely much ado about nothing, are to be trusted, the temporary panic could subside and give way to clearer heads, more central-bank stimulation and a steadier-than-expected market.
However, should the disease continue to spread and gain a more impactful stranglehold on the Chinese economy, there’s still a very real possibility for more disruption.
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