Coronavirus Epidemic: VIRAL SLOWDOWN

The outbreak of the novel coronavirus or Covid-19 has emerged as a black swan event that has repercussions for the Chinese and global economy as well. Though much of China was allowed to return to work on 10 February, the first day following the extended Chinese new year holiday, many people are still undergoing quarantine measures and businesses while factories and mines are struggling to return back to normalcy. The World Health Organization has announced that the novel coronavirus epidemic, that originated at Wuhan region of Hubei province, an automobile and pharma hub, a ‘public health emergency of international concern’. At the time of going to the press, total number of infections in China touched 77,658 with 2,663 deaths. Aside from the mounting human and economic cost within China, there is also a material impact to global commodity trades. Although the global response to the outbreak has been more aggressive than the 2003 SARS outbreak, it is difficult to quantify the exact impact on Indian economy given the significant differences between the two outbreaks – both in scale and severity. Today, the integration between China and rest of the world is significantly higher, the pace of information dissemination is faster and the containment efforts are more coordinated and aggressive, than at the time of the SARS outbreak. Since 2003, China has gained a dominant role in the supply chains of various industries including pharmaceuticals, auto, electronic products and textiles.