Bloomberg Businessweek - USA (2020-03-02)

E C O N O M I C S

22

Edited by

Cristina Lindblad

● One forecast has the

new coronavirus wiping out

$1 trillion in world output

multiday rout wiped out stock gains for the year,

while yields on 10-year government bonds touched

record lows. “The market is pricing in a significant

slowdown in GDP and a 10% impact on earnings,”

saysZhiweiRen,portfoliomanageratPennMutual

AssetManagement.

Fornow,centralbankersandgovernmentscon-

tinuetobetthattheviruswon’tdamagetheworld

economybymuchandthattherewillbea rapid

reboundoncetheillnessis contained.Butthatcon-

fidenceisbeingtested.WhiletheInternational

MonetaryFundreckonstheviruswillforceit to

knockonly0.1percentagepointoffits3.3%global

growthforecastfor2020,IMFChiefEconomistGita

Gopinathsaidina Feb. 24 YahooFinanceinterview

thata pandemicwouldconjure“reallydownside,

direscenarios.”

Broadlyspeaking,thecurrentoutbreakcomes

closetothetechnicalcriteriaforapandemic—a

situation where a new virus, against which

most people do not have immunity, mushrooms

across multiple continents. The World Health

Organization has already raised its highest level of

The global economy had seemed to be improving

as the anxiety caused by the trade wars and Brexit

eased. Suddenly, however, the world is confronting

the specter of the first truly disruptive pandemic of

the era of globalization.

With the death toll in the coronavirus outbreak

approaching 2,800 and approximately 82,000 cases

officially recorded across 30 countries, some econ-

omists are war-gaming what an uncontrolled out-

break could mean for global growth.

Oxford Economics Ltd. figures an international

health crisis could erase more than $1 trillion from

the world’s gross domestic product. That would be

the price tag for a spike in workplace absenteeism,

lower productivity, sliding travel, disrupted supply

chains, and reduced trade and investment.

Investors are already nervous. In the U.S. a

Penciling Out a Pan demic