How Wuhan Coronavirus Is Affecting The World Economy?

As India with Kerala confirming three cases of Coronavirus, the country is in alarming mode. Travelling all the way from China, the virus hit three students from Kerala who was studying in China. The coronavirus started in the city of Wuhan in China– now is spreading its reach slowly across the globe, mostly in Asia countries.  As per the latest report, the death toll on the mainland of China is 361, with more than 17,200 infected. Countries like Singapore are now closing their gates to Chinese visitors. However, the virus has affected not only the health of the people, but the world economy as well.

Impact of Coronavirus in India

Starting with how coronavirus is affecting the Indian economy, China is the third-largest exporter to India. Many products come to India from china because of the low price. China is one of the largest consumers and producers of metals. The virus primarily affected the Chinese economy claiming lives and mine workers are prone to such diseases and are quite vulnerable.

When these miners are affected, the Chinese economy might come to a standstill and furthermore, the prices of metals in India might go up and also create a problem for the people out here in India.

Moreover, there will also be a shortage of metals in the country as well. The same goes for the electronics market as well. Most of the mobile displays, tv panels, PCBs, capacitors, LED chips and many other products are exported from China, so when the virus affects the Chinese economy, the Chinese sellers will increase the price as a result affecting the Indian economy.

Mobile brands like Xiaomi and Realme are also made in China, and these mobile phones are quite in demand in India because of their low price and high efficiency. The halt in the Chinese economy will also lead to a shortage of these mobile phones in Indian markets.

Indian stock is market also suffering due to the virus, shares of select healthcare and safety producers from Japan, South Korea and India have been creating much buzz.

The share of Bharat Immunological & Biological Corporation has surged nearly 50 per cent to Rs 11.24 on January 28, 2020, from Rs 7.54 on January 23, 2020.

Bharat Immunologicals and Biologicals Corporation is an India-based biotechnology company, that manufactures and produces a range of pharma products, including zinc tablets used to treat the common cold, lung infections, malaria, or asthma.

Shares of 3M India, which manufactures products related to healthcare, safety, industrial safety, have expanded 4 per cent on a year-to-date basis till January 28, even as BSE Sensex slid 1 per cent in the same period.

As the fear of contracting the virus and pollution make mask-wearing the new normal, business is flourishing for the manufacturers in Asia.

As per the reports, India’s chemical manufacturers are also likely to benefit if the coronavirus crisis continues to spread and impacts production in the Hubei region of China. It is said that dye intermediate companies like Aksharchem, Meghmani, Kiri Industries and Bhageria Industries could benefit.

On the expectation of the benefit from the coronavirus, several stocks in the chemical space are gaining.

Demand for face masks and hand sanitizing liquid has soared, as local residents and visitors to and from China stock up on such products as a reassuring precaution.

Effect of coronavirus across other parts of the globe:

In Japan, Kawamoto Corporation, which supplies medical products including masks, is on top, with over five-fold jump in January alone. The scrip leapt 479 per cent to JPY 2,591 on January 29, 2020, from JPY 447 on December 30 last year on the Tokyo Stock Exchange. Another Japanese firm Azearth, which is engaged in protective clothing, has rallied 139 per cent during this period.

Some selected South Korean firm also has managed to deliver healthy returns, such as Monalisa has gained 93 per cent year to date, while South Korean pharma companies Kukje Pharma and Woojung Bio have added 66 per cent and 32 per cent, respectively.

Coming to the U.S. economy, the U.S. had recently put sanctions on Iran and also proposed to place sanctions on nations that would import oil from the country. Sources say that this is because the U.S. wanted their oil markets to flourish.

In other parts of the markets, the scare of coronavirus has wreaked havoc on bourses across Asia and also in the U.S. On Wall Street, Dow Jones Industrial Average dipped 2 per cent in last six sessions before registering a promising rebound on January 28, 2020, on booster from Apple earnings. Across Asia, China’s Shanghai index and Korea’s Kospi have dropped 3 per cent each, and Japan’s Nikkei lost 2 per cent over the past one month.

Now that China is affected by the virus; as a result, the citizens will travel less, which would mean that their oil demand will also come to a decline. As a result, the U.S. will be importing less oil; thus, the U.S. economy will be hurt too, as the prices will go down.

Another factor which is being affected is the tourism factor of the countries. Over 50 million Chinese people travel all over the world during the lunar new year, but the outbreak of the coronavirus has stopped these people from travelling overseas.

The countries which benefit from Chinese travellers are Japan, Hong Kong and the USA. However, because of the virus, these 50 million people have been barred from travelling overseas due to the fear that they might infect people of other countries too.

Furthermore, the investors all over the world are in a state of worry because if people stop travelling, the restaurants, shopping malls, brands would see a fall which is terrible for the whole world’s economy.

Reports say that doctors from the various province of China are moving to treat the infected, a suicide mission taken up by them to serve their duties.

Rukumoni Das

I am a student of Political Science doing my final year degree from Handique Girls' College, Gauhati University. I'm aspiring for civil services as social service has always intrigued me.

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