The economic side effects of the deadly coronavirus are still rolling out – this time a steep decline in the price of oil.
As much of China is under quarantine with factories shutting and workers forced to stay at home, the impact of the virus on the global economy is becoming apparent.
China is the world’s second largest economy, and if the country catches a cold, the rest of the world sneezes.
“The number of people infected and affected by the coronavirus continues to grow globally. Governments, as well as agencies such as the World Health Organization, are working tirelessly to contain, and ultimately defeat the virus,” said financial data monitor MSCI.
“In China, local governments have locked down cities and businesses and restricted travel. And the general public has adopted voluntary home quarantine. The human toll has been steep.
“As with many crises, the repercussions of the coronavirus can also be felt in the global economy and the financial markets. Many observers compare the coronavirus to the 2003 SARS epidemic.
“While this can provide useful insight, there are differences between the two periods to consider. China is a much bigger part of the global economy and markets than it was 17 years ago. China’s share of global trade rose to 11% in 2018 from 5% in 2003, based on World Bank statistics. Meanwhile, its share of the MSCI Emerging Markets Index has risen to 34.3% from 7.86% in 2003.”
Meanwhile, the International Energy Authority (IEA) has forecast demand for oil and gas will fall due to coronavirus for the first time in a decade.
Demand is expected to drop by 435,000 barrels a day against a demand of 100 million barrels a day in the final quarter of 2019.