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Economic Fallout from COVID-19 Outbreak in China Mounts Around the World: Analysis Updated: 2020-02-14 16:44:01 KST

When shocks hit the global economy, Wall Street looks to history to see what will happen next.
The outbreak in China of COVID-19, a respiratory disease, invites a comparison to the last one, SARS.
In that outbreak in 2003 China suffered a sharp hit to its growth, followed by a strong rebound. Although COVID-19 has now claimed more lives than SARS, investors remain optimistic that its economic effects will follow a similar path.
But will it? The COVID-19 outbreak and its impact on the global economy - topic of our News In-Depth tonight with Kim Young-han, Professor of Global Economics at Sungkyunkwan University.
Professor Kim, welcome to the program.

The economic casualties from the coronavirus epidemic are mounting as Asian and European auto plants run short of parts, free-spending Chinese tourists stay home and American companies brace for unpredictable turbulence.
Economists and supply chain experts say that's just the start of a financial hangover that is expected to linger for months even if the flulike illness is soon brought under control.
What is your overall assessment of the immediate to near-term economic impact from the COVID-19 outbreak?

There are also reports and forecasts that the epidemic's aftereffects will probably cause the global economy to shrink this quarter for the first time since the depths of the 2009 financial crisis.
How big of a dent do we expect the COVID-19 outbreak to make on the global economy and what about the South Korean economy with its close business ties with its giant neighbor?

The ripple effects of China's shutdown are spreading, with the auto industry especially hard-hit. Nissan temporarily closed one of its factories in Japan after running short of Chinese components, one week after Hyundai in South Korea did the same.
Fiat Chrysler warned that it may shutter one of its European plants.
Some U.S. manufacturers could face parts shortages in one to two weeks. Chinese factories had been scheduled to reopen earlier this week after a Lunar New Year holiday that had been extended for several days because of the medical scare. Are carmakers - including South Korean auto giants - out of the woods for now?

The coronavirus struck China as many U.S. corporations were reconsidering their global footprints. U.S. President Trump's tariffs on roughly 70 percent of all Chinese goods, imposed during a two-year trade war with Beijing, raised doubts about the future of trans-Pacific supply lines.
Has the coronavirus outbreak made companies reassess how international or global they want supply chains to be?

Should there be a change in the global supply chain? Is that possible?

Among the first tangible effects in South Korea is a decline in the number of Chinese tourists. Visitors from China represent a lucrative market for South Korean airlines, hotels, luxury retailers and entertainment venues. This is an industry in South Korea that will most definitely feel the blow?

After initially dismissing the epidemic as principally a Chinese problem, U.S. policymakers in recent days acknowledged it will damage the global and U.S. growth outlooks.
Fed Chair Jerome Powell said this week that there will "very likely be some effects on the United States" from the epidemic, which has closed thousands of Chinese factories that supply American companies.
A dent in U.S. growth outlook will affect Asia's fourth-largest economy, will it not?

South Korea's two economic policy chiefs pledged today to deploy emergency measures to minimize the impact on the economy from the coronavirus outbreak in China
Bank of Korea says it's working on financial aid packages for those sectors directly affected by the spreading coronavirus.
It hasn't given any indication on whether it would lower interest rates to support the economy. But, is that a fair enough option for South Korea?

What are some other options that the economic policymakers of South Korea and the rest of the world consider should containment and recovery efforts by China take longer than expected?

Professor Kim Young-han of Sungkyunkwan University. Many thanks for your analysis tonight. We appreciate it.
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