What is the economic impact of coronavirus?

Channel: Sky News
Published: 12 hours ago

Description
Concerns about coronavirus have had another effect - on the global economy. The share price of some of the UK's 100 largest companies has dropped and the price of oil also fell. Companies with a presence in China were some of the most affected. Sky's economics editor Ed Conway has more. SUBSCRIB



Transcript
The corona virus outbreak, which, as you can see, is spreading through the world, mainly china, but elsewhere in the world as well. It'S not just a major health threat. It'S also causing serious economic reverberations. Most obviously, share prices are down in asia in the us and across europe, so the footsie down by 2. 3 percent today, actually the biggest fall since october. Germany'S dax and fra ...
ces cat-car on also down by similar magnitudes and while chinese markets were closed for lunar new year. They were down 2. 8 percent at the end of last week. Oil prices are also down brent crude down below $ 60, a pound for the first time since october. Why? Well? It'S short it's because, even if this outbreak is pretty contained, it's still going to stop people traveling or trading and in china more than 50 million people have been prevented from traveling from the affected areas, which is a huge deal, because the lunar new year is usually A big time for travel and for spending so you've got domestic implications. China now the second biggest economy in the world and any hit the growth is going to reverberate around the globe. Domestic spending actually accounted for 3.

5 percentage points of total economic growth. The 6. 1 percent in 2019, so you've got the impact on chinese tourism, so countries like japan, hong kong, then luxury and travel sectors. They could be very much affected. You'Ve got chinese tourists who spent a hundred and thirty billion dollars overseas in 2018, and when you have a look at the stocks which are down, you can see, there's a clear pattern. So you've got travel related stocks like british airways owner iad down by five point. Five percent hotels group, intercontinental ihd - it's also four point: nine percent lower in in the luxury sector burberry down 4. 8 % and lvmh down three point: seven percent now ratings agency standard & poor's, says a global epidemic would impact investment, travel in tourism and industrial output, though Some of the impact could be offset by increased government spending on health, emergency services and vaccines. How big could the eventual impact be well? The songs outbreak in 2003 is estimated to have weighed 40 billion dollars off world economic output. It'S too early to work out where the corona virus could be more or less costly, but investors are clearly concerned.


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