World GDP ‘would be cut by £850bn if coronavirus becomes a pandemic’

World GDP would be cut by £850bn if coronavirus outbreak becomes a pandemic, experts warn

The world economy faces an £850billion hit if the deadly coronavirus becomes a full-blown pandemic, experts have warned.

At the moment most infected people are in China, meaning it is classed as an epidemic.

But in a worst-case scenario where the virus affects large numbers of people worldwide – becoming a pandemic – Oxford Economics warned that G7 economies such as the US, UK and Germany could tip into recession.

Scientists test blood samples at a laboratory in Guangdong province, China. Experts fear the global economy could be hit for £850bn if the epidemic becomes a pandemic 

It comes after International Monetary Fund boss Kristalina Georgieva said the coronavirus risked creating ‘substantial supply chain disruptions’ and a dramatic fall in investor confidence.

Apple says factory problems in China would cause a worldwide iPhone shortage, while car fim Jaguar Land Rover has been flying parts out of the country in suitcases. 

Oxford Economics modelled two down-side scenarios for the virus – one where it was confined largely to Asia and another where it spreads across globe.

Consumer spending would be affected by illness, travel restrictions and people staying in. 

Large numbers of sick workers would hurt manufacturing, while concerns would cut tourism and make investors nervous, hitting shares.

If the virus only spreads in Asia, Oxford Economics said about £310billion would be wiped off world GDP, with annual growth slowing to 1.5 per cent in the first half of 2020.

If the virus spreads further, it predicted a ‘short but very sharp’ hit that would wipe £848billion off global GDP. This would see growth crash to zero in the first half before bouncing back ‘rapidly’.

However, the world economy would still be 1.3 per cent smaller than if the virus had not struck.

Georgieva this week said the virus risked causing a ‘sharper and more protracted’ slowdown in China that could affect the world unless it was contained.


Source link