In this blog, Melissa Kreger writes about the updated impacts of the coronavirus.
The coronavirus first outbroke in January and now has become a global health epidemic. The largest question that has been lingering for economists and large investors is, “How long will the Chinese economy be halted and how bad will it affect all economies”? The Chinese economy is the world’s second-largest economy, first behind that of the United States. China being at a halt will affect global supply chains and we are starting to see those repercussions now.
Travel bans are diminishing airline sales and they are taking the earliest hits from the epidemic. Asian and European carriers have implemented cost-cutting measures to accommodate canceled flights to China and curtailed services to other affected areas such as Italy. Most of the airlines are hurting in China due to cancelations of flights leaving and coming into the country. Now that more countries in Europe are also facing outbreaks, their airlines are also now dealing with a dropoff in tourism as well as the prospect of canceled events leading to cancellations of flights.
On top of airlines, large automotive suppliers are warning car companies they could run out of parts in North American factories in the coming weeks. In China, the lack of people leaving their homes to work is significantly hurting the automotive supply chain as well as creating a task for shipping products to North America. Some manufacturers have the funding to ship via cargo plane and they have taken extra costly risks of flying in critical parts to America that way. The area of concern in the automotive industry is not large body components for the vehicles but more of a lack of the small electronic components needed. China is one of the major suppliers of parts to auto plants around the world—shipping nearly $35 billion of parts in 2018, according to UN data. About $20 billion of Chinese parts were exported to the United States alone in 2018, according to the Commerce Department's International Trade Administration.
The coronavirus is sweeping the globe. As we saw in February, U.S. stocks dropped to record low prices as American officials warned against the coronavirus spreading across the United States. Though the stock market was hit hard and products are not shipping out of China, other sectors of the economy are experiencing a huge influx in sales. Any medical prevention products that people can purchase in stores are being whipped off of the sleeve faster than they can stock. Products such as Clorox wipes and respiratory masks are becoming hard to purchase. Next to cleaning and disinfecting products, all across the globe individuals are beginning to “stockpile” dry goods to ensure they are covered if this epidemic continues or even worsens. It is not only Clorox who is selling immense amounts of products; toilet paper, as well as bottled water, is selling at a rapid rate.
Though many are scared of this global health epidemic, the best thing you can do says many medical professionals are to educate yourself, wash your hands and do what you feel best for your situation.