New Delhi: Experts from India and China have opined that world economy may nosedive to an alarming low if deadly Coronavirus turns into a pandemic.
Experts said loss worth $ 500 billion has already occurred to the world economy due to Coronavirus and this figure could soar up to $ One trillion if the outbreak turns into a pandemic.
Participating in a discussion organized by the Sputnik through video conferencing Russia’s Center for the Study of International Economic Relations Director Viktory Perskaya said China’s economy is expected to slow down to nearly 4 percent and tourist and services Industry will be impacted the most.
“The contraction would be reaching around 55 to 60 percent, if the containment is delayed beyond the five to six months,” she added.
Perskaya said that the earlier estimate in February of 0.15 per cent of the global GDP being affected had turned out to be grossly undervalued.
Over the medium to long term, the global tourism industry could be hit particularly hard as the total losses could due to the outbreak could amount to $5 trillion, she said.
Participating in the discussion through video-conferenceing Sergei Louisianin from Moscow said that the Chinese economy had come under great strain due to the outbreak.
China is in transition period and at this point, the breakout will be severally impact the local and the International companies in long-run,” he added.
The china contribution to the world economy is around 40 to 45 percent and in Asia, it is around 55 percent.
But now, growth is slowing. Real GDP growth was only 6 per cent in the 4th quarter of 2019. A 2per cent fall to 4 per cent during the 1st quarter of 2020 would actually mean a drop of 1/3.
With China accounting for about 20per cent of global GDP, such a drop could knock approximately 0.4 percentage points off annualized world GDP growth during the 1st and 2nd quarters of 2020.
The global economy has already slowed into the danger zone (2.9per cent world GDP growth in 2019 according to the IMF’s January update). Shares are priced high, high as the sky; their profit-projections will now not be achieved.
The Russia-based panel was joined by Dr Mahajan, Dr Ajai Sahai, the Director-General and CEO at Federation of Indian Exports Organisation and Anuradha Chenoy, the former dean at the School of International Studies at the Jawaharlal Nehru University (JNU) in New Delhi.
They also echoed the same views regarding the impact of the Coronavirus, over world’s economy but also mentioned it’s an opportunity for India to narrow its massive fiscal deficit with China.
Swadeshi Jagran Manch (SJM) co-convenor Professor Ashwani Mahajan said, “It’s high time that we realise that too much dependence on other countries for business is not a very wise thing to do. The country must ensure that we become self-reliant in crucial matters such as food security and healthcare.
“We are appealing to the government to check the nation’s economic dependence on China,” he said, referring to India’s ballooning trade deficit with the world’s second-largest economy.
According to a government statistic, India imports goods worth $70 billion from China, while exporting only goods worth $17 billion in comparison.
Citing the situation in India’s thriving pharmaceutical industry, Mahajan said the Centre must work towards reversing the trend of importing raw material from China. “Today, we are importing 90 per cent of the raw materials, including Active Pharmaceutical Ingredients (APIs) from China.
The fallout of the outbreak is no longer confined to China and will have an overall effect on global trade. While almost every country engaged in trade with China is bound to be hit, the south-east Asian economies are particularly vulnerable,” said Mr Sahai.
“As far as India is concerned, the impact on the supply chain is significant. China is a leading trade partner of India and we have all the reasons to be upset,” he added.
And once markets panic—properly panic—the end is nigh. A cure would halt this. But this is a new and cunning, highly transmissible virus. Things are looking grey, not just for China, but for its trading partners too, which is just about everyone.