NEW DELHI: As the news of a confirmed coronavirus patient in Kerala along with reports of confirmed or suspected cases in Philippines, Singapore, South Korea, Australia, Canada, France, Japan, Malaysia and Vietnam hit the wires, Mumbai’s Sensex fell from a day’s high of 41,301 to 40,874. The domestic investors joined foreign institutional investors in the bear run on global markets. Japan’s Nikkei fell by 2 per cent; as did Stoxx 600, which tracks a broad number of European bourses, while USA’s Dow Jones Industrial Average fell 1.3 per cent.
Economists fear the global economic contagion from the new virus would be far more than that suffered by the world and Asia-Pacific region during the 2003 SARS crisis. The Severe Acute Respiratory Syndrome also came from China, killing about 800 people and costing the global economy an estimated $33 billion, or 0.1 per cent of world GDP, in 2003. “China has more economic heft now and any disaster that impacts the Chinese economy would surely impact the world GDP,” said Prof Ravi S Srivastava, former chairman, Centre for Regional Studies, Jawaharlal Nehru University (JNU). China last year accounted for 16 per cent of the global GDP compared to 4 per cent in 2003.
The Indian economy, which has been suffering the crippling effect of a demand slowdown coupled with high unemployment rate, needs a benign global economic outlook to be able to regain its mojo. A prolonged virus scare with its negative impacts on global economy is likely to hurt India where growth decelerated to just 4.5 per cent in the July- September 2019 quarter, the slowest growth rate in six years, with factory output in the negative territory for three consecutive months. China and India did a twoway trade worth some $93 billion in 2019.
“While the impact may be temporary, it will be seen in our trade statistics,” said Prof Biswajit Dhar of JNU, a trade policy expert. The Federation of Indian Exporters has already warned that the Chinese virus epidemic could disrupt Indian manufacturing as China was an important part of the global supply chain. Experts fear that sectors that could be hit include electronics, especially mobile manufacturing; automobiles, where some of the spares come from China; and pharmaceuticals, which depends largely on China for chemical raw materials.