Anxiety grips companies as virus spreads

Since breaking out of China, the coronavirus has breached the walls of the Vatican.

It's struck the Iranian holy city of Qom and contaminated a nursing home in Seattle.

And around the world, it's carrying not just sickness and death but also the anxiety and paralysis that can smother economic growth.

From Florida, where the chief executive of a toy maker who can't get products from Chinese factories is preparing layoffs, to Hong Kong, where the palatial Jumbo Kingdom restaurant is closed, businesses are struggling.

The virus has grounded a British airline, and it's sunk a Japanese cruise ship company.

The cumulative damage is mounting.

The Organization for Economic Cooperation and Development this week slashed its forecast for global growth for this year to 2.4 per cent from 2.9 per cent.

It warned that Japan and the 19 European countries that share the euro currency are in danger of recession. Italy may already be there.

Capital Economics expects the Chinese economy to shrink two per cent in the January-March quarter and to grow as little as two per cent for the year.

That would be a disastrous and humiliating comedown for an economy that delivered a sizzling nine per cent average annual growth rate from 2000 through last year.

The bleak outlook and nagging uncertainties about how severe the damage will be have shaken financial markets.

The Dow Jones industrial average, gyrating wildly from day to day, has plummeted nearly 12 per cent over the past month.

When COVID-19 emerged in China a few weeks ago, many economists envisioned something like what happened when SARS hit China and Hong Kong in 2003: A short-lived interruption of Chinese economic growth, one that left the global economy largely unscathed.

Yet the new virus has spread far faster and more widely than expected.

Between November 2002 and early August 2003, SARS infected 7400 people in 32 countries and territories and killed 916.

By contrast, COVID-19 has infected more than 100,000 people and killed more than 3400 in 90 countries. And the toll is growing.

The UN Conference on Trade and Development said last week that a shortage of industrial parts from China, caused by the coronavirus outbreak, has triggered a "ripple effect" that sent exports from other countries tumbling last month.

In Hong Kong, downtown streets that are usually jammed on weekdays are eerily empty and homeowners are unloading property at steep losses.

The virus is depressing tourism in South Korea and Japan, which have been severely hit by the outbreak.

Fujimisou, a traditional Japanese inn in central Japan, had managed to fend off bankruptcy by catering to Chinese tour groups - until they stopped coming.

Also filing for bankruptcy was a famous maker of potato croquettes in Hokkaido and the Luminous Cruising Co.

It was crushed by cancellations after an outbreak of virus cases aboard the Diamond Princess, a Carnival ship that was quarantined for weeks offshore from Yokohama.

Austrlaian Associated PressBack to Breaking News

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