LONDON, Jan. 29, 2020 /PRNewswire/ -- Given the importance of China to our industry, this Insight sets out the potential impact of the Wuhan coronavirus on commodity markets. Using the SARS episode as a benchmark, the impact on Chinese GDP and industrial production could be as large as 1% – but that estimate comes with a large margin of error at this early stage, as we are still learning about the virus. The impact on global commodity prices was virtually zero during the SARS epidemic, but the commodity price and demand impact is likely to be much larger now, given that China consumes around half of the world's commodities today.
Background
The first outbreak of the 2019-nCov was in Wuhan, in mid-December. The virus is a member of the family of coronaviruses and is 75-80% identical to the SARS virus, which the WHO dates to have started in November 2002 and continued into late 2003. In only 10 days from January 16, the number of infected people in China went from 45 to almost 3,000. On Tuesday January 28 the death toll reached 106, with confirmed cases reported in 12 other countries (including Hong Kong, USA, Japan, France and Singapore). But the silver lining, according to the Chinese National Health Commission, is that 51 people have recovered from the virus, and therefore have been discharged from hospital.
More than 60 million people in 15 cities in China have been fully or partially locked down since the virus outbreak. On top of this, the Chinese government has extended the Chinese New Year public holidays, to delay the mass migration of people back to work.
In terms of geography, Wuhan is the capital of Hubei province with 60 million people. Its central location and proximity to the Yangtze River means it's an important logistical hub for China. It is also an industrial centre and home to the second largest automaker – DFAC – with whom foreign automakers including Nissan, Honda and Renault have joint ventures.
Sizing the Wuhan coronavirus: how bad was SARS
A virus outbreak is a rare occurrence – economists refer to it as a 'black swan' event. It is hard to predict the economic impact of rare events, particularly when the story is still unfolding. We can size the potential impact of this virus, by looking at previous outbreaks. The most obvious reference point being the Severe Acute Respiratory Syndrome (SARS) outbreak in China. The start of the outbreak is dated as November 2002 by the WHO, it continued well into 2003.
Read the full story:
https://www.crugroup.com/knowledge-and-insights/insights/2020/economic-impact-of-wuhan-coronavirus/
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About CRU
CRU offers unrivalled business intelligence on the global metals, mining and fertilizer industries through market analysis, price assessments, consultancy and events.
Since our foundation by Robert Perlman in 1969, we have consistently invested in primary research and robust methodologies, and developed expert teams in key locations worldwide, including in hard-to-reach markets such as China.
CRU employs over 280 experts and has more than 11 offices around the world, in Europe, the Americas, China, Asia and Australia – our office in Beijing opened in 2004 and Singapore in 2018.
When facing critical business decisions, you can rely on our first-hand knowledge to give you a complete view of a commodity market. And you can engage with our experts directly, for the full picture and a personalised response.
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