As coronavirus cases begin to spread, the world economy is beginning to feel the pressure. Corporate giants such as HSBC and Apple have warned that the outbreak is likely to hit their profits, with other industries also expecting to feel the pressure. As authorities battle to contain this new virus, we take a look on the impact on the economy.
What is the coronavirus?
Coronavirus 2019 nCoV originated in Wuhan, the capital of the Hubei province, with the first cases identified at the start of December 2019. The virus has now spread to every continent in the world, except Antarctica, with The World Health Organisation declaring the virus a public health emergency of international concern on 30 January.
The immediate economic impact
The coronavirus spread rapidly throughout China and the country has already started to feel the economic impact of the epidemic. The industries in China which depended on the movement of both people and goods, are the most severely impacted, such as commercial shipping, airlines, cruise operators and other businesses involved in tourism. However, there are also disruptions to industries such as education, with a number of UK universities off-shoots in China under threat.
What will be the economic impact in the UK?
The coronavirus is a new virus strain, so at the moment there is no immediate cure. Instead, governments across the world are putting control measures in place to control the spread of the virus. The exact impact on the economy both abroad and here in the UK is difficult to predict, as the duration of the virus and its impact on the world are still unknown. If the virus can be quickly contained, economists are optimistic that economies across the world will be able to recover quickly.
Here in the UK we import many products from China including mobile phones, car parts and microprocessors. With plants in China closing due to the outbreak, it is likely that UK businesses will feel the impact on their supply chain soon. One of the areas which has already been impacted is tourism, with fewer tourists visiting the UK due to travel restrictions.
China is the second largest economy in the world and is the leading trading nation, so the impact is expected to send ripples across the world. Mark Carney, governor of the Bank of England, has warned that larger companies around the world are already seeing lower activity within their supply chains. Mark also advised that the global economic growth is expected to be lower than anticipated, which will have a knock-on effect here in the UK.
How can I protect my business?
If your business relies heavily on trade with China, it is likely that this outbreak has highlighted the significance of diversified supply chains. For example, if your business imports products from China, there could be other countries which are able to supply the products you need. By reducing your reliance on imports from China in the immediate future, you could protect your business from a shortfall in stock.
It is also important to protect your employees from risk of infection, so businesses should take steps to avoid business travel to infected regions. The advice for any person who has visited an infected area is to self-isolate at home for a period of 14 days, if they are suffering flu like symptoms. For many industries it may be possible for employees to work remotely, however if agile working is not possible businesses may start to feel the impact on productivity due to these absences.