Damage to the global economy by the coronavirus epidemic will likely be significant, said an expert.
The epidemic that started in Wuhan, China, and is also known as corona, has knocked significant value off markets worldwide and caused a slump in commodity prices. China’s Shanghai Composite index dropped more than 8 percent as trading resumed on Monday, its worst opening since the 2007 financial crisis.
“Given the size of the Chinese economy and the global economy epicenter of China, we think you could take between 100 to 150 basis points off of growth, assuming it's contained within the first quarter, and obviously it’s very significant for China itself,” said Norman Villamin,
chief investment officer and senior managing director at Union Bancaire Privée.
“That reverberates through the global economy, the closer you are to China, the closer the ties are to China, the bigger the effects,” he added.
Beyond China, Villamin expects the coronavirus epidemic to knock 0.2 to 0.3 percent off of global GDP.
Oxford Economics, a global forecasting and quantitative analysis company, expects the coronavirus to significantly hit the global economy to the tune of 0.25 percent for 2020, a more significant effect than the 0.15 percent impact the 2003 SARS outbreak had.
The impact of coronavirus fears on Middle Eastern markets has been severe. The Saudi Stock Exchange headline index Tadawul all index share (TASI) traded more than 4 percent down on Monday from its January high. Dubai’s main index is also trading more than 3 percent down from the January high.
Coronavirus has killed more than 350 people and infected more than 17,000 others.
The outbreak is believed to be the result of the consumption of a pathogen usually found in wild animals. Exotic animals are commonly found in Chinese markets, where their meat is sold for food or traditional medicines.
The lethal virus has spread to countries outside of China, including the US, Canada, Australia, Japan, Vietnam, and France.