As Coronavirus Crises Grows China's Economy Suffers

The World Health Organization (WHO) will meet on Thursday to decide whether to declare the coronavirus outbreak in China a global health emergency.

A global health emergency will be declared if the WHO determines that the outbreak poses a danger to international public health and not just to China. Officials at the WHO will want to look at the level of risk to other countries through international spread of the coronavirus, and whether a coordinated international response is required.

China's neighbouring countries are getting nervous and some are already taking tough measures even before the WHO makes a decision about any coordinated international action.

Mongolia has closed its 4,700 kilometre-border with China in a bid to prevent the spread of the virus to Mongolia. Even semi-autonomous Hong Kong, which is part of China, has taken the decision to restrict travel to and from mainland China.

Meanwhile, in response to directives from their national authorities, major airlines around the world in North America, Europe and Asia have suspended flights to China.

All this is slowly tightening the isolation of China from the rest of the world, which is bound to have serious consequences for the country's economy, and a knock-on effect on the rest of the global economy given the importance of China's economy. China's economy was already in some difficulty even before the outbreak, with the International Monetary Fund (IMF) saying that economic growth in China will fall from 6.1 per cent in 2019 to 6 per cent in 2020. And that's before factoring-in the widely acknowledged belief that officials in Beijing always massage and overstate the country's GDP figures.

With that in mind, some analysts are suggesting that the outbreak in China could push growth down even further to levels like 3.9 per cent last seen in the early 1990s, or down to zero growth given Beijing's overstating of GDP figures.

It is hard to determine what extent such a slowdown in the world's second-largest economy will affect growth around the rest of the world. The hope is that when the outbreak is eventually contained, the Chinese government will embark on a massive stimulus programme to mitigate the economic impact.


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