Andrew Dickens: Economy set to catch a chill from coronavirus outbreak

Author
Andrew Dickens,
Publish Date
Mon, 17 Feb 2020, 12:24PM
Multiple sectors are set to be harmed by the coronavirus outbreak. (Photo / CNN)

Andrew Dickens: Economy set to catch a chill from coronavirus outbreak

Author
Andrew Dickens,
Publish Date
Mon, 17 Feb 2020, 12:24PM

Each day I’m getting a little more concerned about the coronavirus outbreak of Covid 19.

I’ve always bit a bit concerned but optimistic that this will pass quickly and life and trade will go back to normal.

After all the last coronavirus, SARS, came and went.  A virus that was more deadly than this current one.

But there’s a couple of things that have got me more worried.

When I interviewed Health Minister David Clark yesterday on the extension of Chinese visitor bans,  I said the often quoted argument that influenza kills more people but we don’t ban visits from infected areas.  David agreed but said the difference is that we have vaccines for flu.

Until we create a medical wall against the spread of the virus, then the physical wall of visitor bans will have to stay in place unless the virus peters out, which it doesn’t look like doing.

And then there was a piece in the South China Morning Post that warned that Covid 19 was going to be more damaging to the Chinese economy than SARS.

Put simply, the virus may be less deadly but it’s more catchy and it’s therefore not petering out and the quarantining, which is what hurts the economy, is going to go on for longer.

SARS killed 800 quickly. It cut two percentage points from China’s real GDP growth in the second quarter of 2003 and caused US$50 billion of damage to the global economy.

These days the Chinese economy is four times bigger than it was 17 years ago and we’re all a lot more connected and dependent on China.

The outbreak happened in the Lunar New Year holiday when everyone was travelling spreading this catchy little virus far and wide.  More Chinese holiday now than 17 years ago, making it harder to quarantine it out of existence.

Hospitality, retail, air travel, transport, entertainment and tourism will be among the sectors hardest hit, sectors that have grown the fastest in China as they move away from manufacturing into services and consumption.

Add all this into the continuing friction with the US with the tariff wars, the number of moribund economies around the globe and the forthcoming Brexit bubble and the South China Morning Post thinks the chance of a Chinese economic meltdown are higher now than ever before.

You and I are not going to die of Covid 19.  We’ll probably not even catch it.  But the economy will be getting a chill if not a full blown illness.

Meanwhile, I heard Simon Bridges this morning promising 3 per cent growth under National because he says his party are just better at this economy stuff. Good luck with that, Simon.