The Coronavirus and How It Affects Our Economy


People are increasingly concerned about the new coronavirus outbreak. Hailing from Wuhan, it has spread really fast across the globe where thousands of confirmed cases have been identified the death toll is increasing. 

There is no doubt that it’s deadly for humans – but can it also be deadly for the economy? 

Coronavirus has already affected prices and trade in the stock markets. Investors have already taken to safe-haven assets such as gold and pulling out their investments from companies that have exposure to tourism, travel and luxury sectors as reported by The Financial Times.

For reference, the 2003 Severe Acute Respiratory Syndrome (SARS) crisis emerged caused from US$40 billion to US$50 billion in economic losses, mostly due to a fall in travel and consumer spending. With that in mind, here is a projection on how the coronavirus from Wuhan might affect the different regions:


  • A blow to the first-quarter growth is expected due to slowing consumer spending, travel, tourism and manufacturing sectors.
  • A 40 million-strong population of Wuhan, Hubei province has been put in complete lockdown which means lower than usual consumer spending and expenditure on travel and tourism from that area of China
  • Shanghai which accounts for 3.63% of the total GDP of China has extended its Chinese New Year holiday to the 9th of February. Offices will remain closed till then. This means that the financial hub will incur heavy losses to the GDP as a whole.
  • Manufacturing hub of Suzhou will remain closed for up to a week. This has affected stocks in the manufacturing sector.
  • A week-long Chinese New Year celebration events starting from Sunday have all been cancelled. This will impact consumer spending heavily which is usually high around every Chinese New Year.
  • China’s offshore renminbi exchange rate weakened 0.8% to Rmb6.9820 a dollar on Monday.


  • When the stock markets re-opened on Monday, 27th of January, 2020 a continuous fall or negative sentiment was seen mainly for the stocks of travel, luxury and mining sectors. This was one of the worst days for the European markets since October 2019.


  • Brent crude was down by 3% and it is now below 60 US dollars a barrel.
  • Japan’s Topix was down by 1.6%.
  • The 10-year US Treasury Bond yields fell by 5 basis points to 1.6218 %. This is the lowest in the last 3 months.
  • Since gold is a safe haven investment, investors have caused gold prices to rise by 0.8 % to 1578 US dollars on Monday.

The C Rule

As the number of confirmed cases are increasing daily, it is of utmost importance to keep yourself (and others) safe. Here are a few things you can do as a precaution:

  • Check With Your Doctor: The most important thing is to go and get yourself checked. This virus doesn’t have defined symptoms (yet). It’s always better to go see a doctor. In case of fever, cough and difficulty in breathing, immediately seek medical care and share previous travel history with the doctor.
  • Cook your meat thoroughly: One should absolutely avoid consumption of raw meat or under-cooked meat due to the chances of cross-contamination between raw meat, milk and animal organs with the uncooked food and hence, they should be handled with care. Since there’s no clarity as to which meat is causing this infection, it’s best if you can avoid meat and live markets for the time being.
  • Cover your mouth: A basic courtesy now turns into a preventive measure. Cover your mouth when you cough or sneeze with a tissue. Dispose of the tissue properly, wash your hands and always wear a mask.


There is actually very little information on the “growth rate” of the outbreak as there is currently no vaccine, and very little beyond basic hygiene has been advised to minimise the risk just yet. 

As for the economy, trade that has some economic relations with China is expected to be heavily affected by this outbreak. Their growth will be dependent on how the government in China and in other affected countries contain the outbreak and stop it from spreading any further.

Written by

Aditya Gupta and Sourabh Jain

Last updated on

January 28th 2020, 2:30 pm

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