As the Indian economy started to show the green shoots of economic revival, a possibility of a virus outbreak may disturb the markets once again.
The coronavirus, widely known as China virus, has finally hit the Indian shores with the first case surfacing today. The news is devastating as this virus outbreak is also believed to be an economy-killer, apart from its capability to quickly transmit into larger masses and affect them. As the Indian economy started to show the green shoots of economic revival, a possibility of a virus outbreak may disturb the markets once again. Federal Reserve Chairman Jerome Powell has said that the rapidly spreading virus outbreak in China is emerging as a potentially major new risk to the global economy, leaving policymakers grappling with the impact of the US-China trade war, fretting over the widening fallout. He also said that the extent of the economic damage that the virus may ultimately inflict, in China or around the world, remains unknown.
Analysts have also compared the current coronavirus outbreak to the 2002-2003 Severe Acute Respiratory Syndrome (SARS) epidemic, which led to about 800 deaths and slowed Asia’s economic growth, Reuters reported. However, as China now accounts for a larger share of the world economy, it is also believed that the impact on global growth this time could be bigger.
India is already undergoing a phase of a prolonged slowdown and the threat of a virus outbreak of intensity as large as this has mushroomed the possibilities of higher risk. Among the major reasons that have kept India away from growth in recent quarters is the global slowdown driven by the US-China trade war. Now, that the companies and businesses have another big reason to leave the Chinese market, the instability in the global market, especially in the Asian market, is difficult to assess at the moment.
Meanwhile, major companies across the world have started to respond to the virus outbreak by suspending some operations in China. “Starbucks said it plans to close half its stores in China, its second-largest market. British Airways has halted all flights to China, and American Airlines suspended Los Angeles flights to and from Shanghai and Beijing,” the NYT reported. Hotels, airlines, casinos, and cruise operators are among the industries that have suffered the most immediate repercussions. Coronavirus has also hit the tourism industry of China. Ironically, in India as well, there are many states that extensively depend on tourism for its revenue generation.