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 outputmultiday 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 ofThe 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. aPenciling Out a Pan demic