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BUSINESS Wednesday 29 January 2020
A25

Bad timing: New virus poses threat to fragile world economy

By PAUL WISEMAN, time,’’ said Andy Roth- but unsustainable growth
JOE MCDONALD man, investment strategist built around often-wasteful
and YURI KAGEYAMA at Matthews Asia. “People investments to steadier but
AP Business Writers shouldn’t get panicked less striking growth built on
This should be peak sea- that growth is going to slow consumer spending by the
son for a 12-room hotel sharply’’ over a sustained country’s growing middle
near the train station in the period. class.
Chinese industrial hub of Still, the Chinese economy The Chinese economy has
Wuhan. The Chinese New isn’t the dynamo it was in also been buffeted by a
Year usually brings in plen- the early and mid-2000s trade war with the United
ty of travelers and delivers when growth routinely hit States. The two countries
profits of around $3,000 a double digits. signed a truce earlier this
month. The IMF expects China’s month that was expected
But the place is empty. Wu- growth to drop from 6.1% to provide some econom-
han, the center of a dead- in 2019, already the slow- ic relief. Then the viral out-
ly viral outbreak, is on lock- A currency trader wearing a mask watches a calendar at the est since 1990, to 6% this break hit.q
down. “There is not a single foreign exchange dealing room of the KEB Hana Bank head- year and 5.8% next. The
customer,’’ said the hotel’s quarters in Seoul, South Korea, Tuesday, Jan. 28, 2020. slowdown reflects China’s
owner, who gave only his Associated Press difficult transition from fast
surname, Cui. He still has in recent years,” said Eswar Hong Kong and Shanghai,
to pay rent and his utility Prasad, a Cornell Univer- the airline said in a state-
bills. Instead of counting his sity economist and former ment. “It’s still too soon to
earnings, he’s expecting to head of the International measure what the impact
lose $1,500 a month. Monetary Fund’s China di- is going to be from an eco-
The outbreak arrives at a vision. nomic perspective,’’ said
bad time for Wuhan, China No one knows exactly how Jim Baird, chief investment
and the world economy. the outbreak will play out officer at Plante Moran Fi-
China, with the world’s No. or what its economic im- nancial Advisors.
2 economy, was decel- pact will be. The SARS experience offers
erating even before the Authorities are still trying to some reason for economic
coronavirus hit. better understand the new optimism. That outbreak,
And the world economy is virus. It is from the corona- centered in southern Chi-
coping with an unexpect- virus family, which also can na, initially clobbered the
edly sharp slowdown in No. cause the common cold Chinese economy. In the
7 India, which prompted as well as more serious ill- April-June quarter of 2003,
the International Monetary nesses such as SARS. China’s economic growth
Fund last week to down- The Chinese government dropped to an annual
grade its outlook for global has locked down Wuhan rate of 9.1% from 11.1% the
growth this year. and 16 other cities in Hubei previous quarter, noted
The coronavirus is drawing province, isolating more economists Tommy Wu
comparisons to the SARS than 50 million people. The and Priyanka Kishore of
outbreak, which paralyzed United States and other Oxford Economics. But as
the economies of China countries prepared Tues- the health crisis subsided,
and Hong Kong for weeks day to airlift their citizens growth picked back up,
in 2003. But what happens out of Wuhan. The out- recovering to a 10% annu-
in China carries a lot more break has brought every al rate in the second half of
weight these days: In 2003, day business to a stand- the year.
China accounted for 4% still and closed down such “From what we know,
of global output. Now its popular tourist attractions it’s likely to be similar this
share is 16%, according to as Beijing’s former imperial
the World Bank. palace, Shanghai Disney-
“A growth slowdown in land, Hong Kong Disney-
China could have sizable land and the city’s Ocean
ripple effects across Asia Park.
and the rest of the world, The significant decline in
given the size of China’s travel has already caused
economy and its role as the United Airlines to suspend
key driver of global growth some flights to Beijing,