ECONOMICS FOR MANAGERS: Impact of Coronavirus on China's Economy

This report, prepared for Economics for Managers, examines the disruptive effects of the COVID-19 pandemic on the Chinese economy. It discusses the impact of the virus on global supply chains, manufacturing, and consumer demand, highlighting the concerns of international organizations like the IMF. The report analyzes the economic contraction in China, its potential to trigger a global recession, and the adverse effects on various sectors, including commodity markets and travel. It references GDP forecasts and the potential economic costs associated with the pandemic. The report concludes by emphasizing the need for swift and forceful government actions, including effective health measures and targeted policies to support healthcare systems, businesses, and vulnerable groups to help enhance economic growth again.

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Table of Contents
Impact of CoronaVirus on the Chinese Economy......................................................................2
Reference....................................................................................................................................5

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Impact of CoronaVirus on the Chinese Economy
An epidemiological threat for instance new coronavirus has caused disease COVID-
19, which is having disruptive effects on economy around the world. As with the spread of
coronavirus, the biggest companies around the world have begun painting miserable picture
of the broken supply chains, empty stores, disrupted manufacturing and weakening demand
for wares. According to the managing director of IMF, Kristalina Georgiev, this outbreak is
the most pressing uncertainty of world. The economic disruption resulted by virus and
increased uncertainty are getting reflected in the lower valuation as well as increased
volatility in financial markets. At first, Coronavirus was detected in the Chinese city of the
Wuhan, which is nerve center in the global supply chain with the population below eleven
million. The epidemic coronavirus in China is depressing its outlook of economy
(Stankiewicz 2020).
China will be considered as the biggest reason, if coronavirus plunges world into the
recession. The economist around the world caution that its shutdown is threatening
economies of South Korea, Japan, Europe and even US. The impact is already seen by the
huge corporation such as Pfizer, AB InBev, Microsoft and Apple. China is now touching
lives of the billions of people all around the world. It has become voracious consumer of
world’s food, oil rocks and the raw material (Oecd.org. 2020). Further, China matters a lot to
business person, farmers, truck drivers, tour guides and countless others, who depends on the
Chinese economy. The contraction of output are being felt around the world, which is
reflecting rising and key role in commodity markets, global supply chains and travel markets.
The adverse impact on the confidence, travel sector, financial markets and disruption to the
supply chains has contributed to downward revisions in all the G20 economies in year 2020,
especially ones that is strongly interconnected to the China (Laura He 2020).

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Graph 1: Impact of Coronavirus on Chinese Economy
Graph 2: GDP Forecast of China
The Organization for Economic Cooperation and Development has cut its expectation
for the global growth from 2.9% to 2.4% and they have warned that growth could fall as

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lower as 1.5%. There is expectation to have global contraction in first half of the year. The
recent forecast for the first-quarter growth of GDP in China ranges from 5.8 percent to -0.5
percent, underscoring higher uncertainty degree. The World bank paper of 2006 put potential
cost of severe flu pandemic at 4.8 percent of the global GDP, which is the fall seen by rival in
2009 after financial crisis (Oecd.org. 2020). Hence, the government are required to swiftly
and forcefully act for overcoming coronavirus as well as its impact on economy. The
government should ensure well-resourced and effective health measures for preventing
contagion and infection, implementing well-targeted policies for supporting systems of health
care and workers and protecting incomes of the vulnerable businesses and social groups
during virus outbreak. This will help in enhancing economic growth of China again
(Businesstoday.in. 2020).

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Reference
Businesstoday.in. 2020. Coronavirus outbreak may put China's GDP, global economy in dire
straits. [online] Available at:
https://www.businesstoday.in/current/economy-politics/coronavirus-outbreak-may-put-china-
gdp-global-economy-in-dire-straits/story/396095.html [Accessed 11 Mar. 2020].
Laura He, C. 2020. China's economy could shrink for the first time in decades because of the
coronavirus. [online] CNN. Available at: https://edition.cnn.com/2020/03/04/economy/china-
services-employment-coronavirus/index.html [Accessed 11 Mar. 2020].
Oecd.org. 2020. [online] Available at: http://www.oecd.org/berlin/publikationen/Interim-
Economic-Assessment-2-March-2020.pdf [Accessed 11 Mar. 2020].
Stankiewicz, K. 2020. JPMorgan sees China's economy growing 15% in second quarter as it
recovers from coronavirus. [online] CNBC. Available at:
https://www.cnbc.com/2020/02/26/jpmorgan-china-gdp-up-15percent-in-q2-after-negative-
coronavirus-driven-q1.html [Accessed 11 Mar. 2020].