As the novel Coronavirus ravaged China since December, the production lines have come to a standstill in the country. The city of Wuhan is the epicentre of this new epidemic which is located in the Hubei province, a major manufacturing hub on which many US-based companies depend, in fact as much as 92% a recent analysis has found. As thousands of new detections rise each day and the death toll continues to rise, the Chinese government has halted productions in many sectors to prevent further spread of the virus.
The safety measures, however, have vastly slowed down the supplies of materials that are shipped worldwide as businesses and manufacturing units. These are forced to draw shutters across the country to prevent further spread of this dangerous virus. Therefore, companies have started to look elsewhere to sustain steady supplies of materials for continued productions.
A spike of 17% in the share of freight searches in other countries outside of China, more than double from last year’s 8%. Hubei’s provincial government has stated that businesses cannot resume operations before endFebruary as of now, however, there are some exceptions for essential supplies according to WSJ, such as medical supplies and food.
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Businesses in the US and other top importers of Chinese raw materials are looking to other exporting nations to reconcile the commerce slowdown. For example, for furniture, toys and plastic articles they are considering Mexico and Brazil while for medical, pharma and surgical good they are turning to India and Brazil. On the flip side, this shift is expected to boost up the export economies of these countries which will tackle the new rush of orders.
Regardless of these measures, the coronavirus hit Chinese slowdown is projected to have a global economic impact. According to a WSJ survey, 83% believed that the coronavirus will have a minor impact on the GDP of the United States, a projected figure of 0.5% it estimated.
The death and recoveries continue to rise up, there remains much to be guessed on how the whole development will ultimately influence the global trade. For example, if it turns into a global pandemic, it might have much more severe consequence on the global economic marketplace.
As China continues to deal with this virus with strict measures such as citywide quarantines and fast track hospitals, economic players must turn to other markets unaffected by the crisis for its interim requirements.