Where a stringent policy response is deemed necessary, business will inevitably be impacted, with both near-term effects and less-expected longer-run consequences.
- Travel restrictions and quarantines affecting hundreds of millions of people have left Chinese factories short of labor and parts, disrupting just-in-time supply chains and triggering sales warnings across technology, automotive, consumer goods, pharmaceutical and other industries.
- Commodity prices have declined in response to a fall in China’s consumption of raw materials, and producers are considering cutting output.
- The mobility and work disruptions have led to marked declines in Chinese consumption, squeezing multinational companies in several sectors including aviation, education abroad, infrastructure, tourism, entertainment, hospitality, electronics, consumer and luxury goods.
Overall, China’s GDP growth may slow by 0.5 percentage points this year, taking at least 0.1 percentage point off global GDP growth. This will ripple through developed and emerging markets with high dependencies on China – be that in the form of trade, tourism or investment. Some of these countries exhibit pre-existing economic fragilities, others (acknowledging an overlap) have weak health systems and thus lower resilience to pandemics. Many Asian and African countries lack surveillance, diagnostic, and hospital capacities to identify, isolate, and treat patients during an outbreak. Weak systems anywhere are a risk to health security everywhere, increasing the possibility of contagion and the resulting social and economic consequences.
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