In its latest report, shipbroker Intermodal said that “the coronavirus outbreak is estimated to negatively affect global economy by at least EUR400bn this year, representing around the 0.4% of global GDP. The degree to which different economies will be affected varies, with some countries looking at damages only in few industries. In that spirit, since the Greek economy is not very reliant to the Chinese one, we can assume that the sector that will suffer most will be tourism, taking into consideration the upcoming holiday cancellation domino effect from Asia based citizens”.
The Chinese government announced that aggressive measures will come into effect in an effort to limit the impact of a major shock from the spread of the coronavirus outbreak to the global economy. Part of these measures will include a brave injection of 1.2 trillion yuan (EUR 156 billion) in the country’s financial system as well as tariff exemptions on US farm, medical and energy products. In an effort to assess the extent that the economic impact the virus outbreak will have, Goldman Sachs analysts estimated that only a 0.1%-0.2% of the global economy will be affected, with this cost climbing up to 0.3% of the global GDP in the most pessimistic scenario. The tanker market was the last one feeling the impact of the virus outbreak, with demand and rates being affected fairly recently compared to other sectors, however, if the spread continues for a long time, then Chinese demand for oil may experience contraction and push rates to even lower levels.
Measures for preventing further expansion in ports
Timely safety measures and preventive actions by various ports and shipping organizations are expected to limit the impact of the outbreak. The International Chamber of Shipping (ICS) stated that by implementing certain preventive measures for coronavirus, ports and global shipping can continue to operate and avoid the closure of any port. The ICS recommenced exit screening at all ports in the affected areas to isolate passengers displaying symptoms of the disease and curb its spread to other countries.
All major ports across the world have adopted a 14-day quarantine period for vessels arriving from or transiting through China. Vessels arriving from China are required to report regarding the health of the crew members and passengers prior to berthing.
What about China’s economy?
Economists polled by Reuters expect China's growth rate to slump to 4.5 percent in the first quarter of this year from 6 percent in the previous quarter. That would be the slowest pace since the financial crisis.
With much of the country in lockdown, the virus could affect up to 42 percent of China's economy, according to Standard Chartered. Companies may struggle to make payments on loans leading to a rise in what is called non-performing loans of $1.1 trillion, according to Standard and Poor's. Chinese airlines have been forced to ground planes and are expected to lose $12.8bn in revenue.
Globally, the airline industry is set to lose $29bn, according to the International Air Transportation Association (IATA).