In the past few weeks, an outbreak of the coronavirus from Wuhan, China has left over 100 people dead. China has issued a mandatory quarantine to many cities, which has left many travelers stranded. However, behind China’s effort to stop this virus is the economical impact of this virus on many companies.
With Lunar New Year around the corner, many Chinese families have plans to travel, a practice that boosts the tourism industry in surrounding regions. As China’s outbreak continues, the quarantine has affected the tourism industry. Thailand, one of the many countries taking the biggest hit, has reportedly lost over a billion in revenue. The tourism industry has been hit especially hard, causing a fall in the global stock market.
As many companies such as Honda and IKEA have recently relocated manufacturing to China, halting work means less production. The virus outbreak has prompted many companies to scramble and relocate their production lines to Southeast Asia in hopes to recuperate lost gains. The relocation of many production lines has cost companies lots of money. In the meantime, companies have been relying on the temporary relocation of production lines in Southeast Asia. As some production lines rely on parts coming from China, companies are still working on how to solve the production issue. The issue has slowed production, leading to fewer products being sold. Many workers, especially migrant workers coming from rural China have faced the effects, with no income coming in.
Although the quarantine provides a temporary solution for the virus outbreak, the economy will not be able to sustain for a long term as the cost will only increase. As governments struggle to decide on whether to protect public health or a small economic gain, the disease has currently put a toll on the global economy. The negative impact on the economy should not be downplayed, but the severity is too early to measure at this stage.
Sources:
Image from: Rapoza, Kenneth. “China Coronavirus Is Now Halfway To SARS.” Forbes, Forbes Magazine, 27 Jan. 2020, www.forbes.com/sites/kenrapoza/2020/01/27/china-coronavirus-is-now-halfway-to-sars/.
Gerry Shih, Simon Denyer. “Asia Faces Steep Economic Price as It Moves to Curb Links with China over Virus Fears.” The Washington Post, WP Company, 28 Jan. 2020, www.washingtonpost.com/world/asia_pacific/coronavirus-china-live-updates/2020/01/28/da7664f2-414d-11ea-b503-2b077c436617_story.html.
I appreciate you focusing on such a global and relevent issue, and proving what we are being tought... that economics is everywehere. I feel like there could definitely be an even further deep dive into the effects that none of us really consider, and I feel like you defintely had a point there, especially with the quarantine and how a supposive solution, has its own consequences.
ReplyDeleteThis was really interesting, I hadn't thought about how the Corona virus has been affecting the economy. You brought up a good point that because so much manufacturing is located in China, many companies are being negatively affected. It is important to limit the spread of the virus, but now companies must figure out how to get the required parts that they had relied on China to produce.
ReplyDeleteThis is interesting because this problem is continuing and not getting better. In the last couple of days, more and more countries have closed off China which does continue to impact the supply chains which have factories in the country. Many Chinese workers are also impacted even when they work in other countries (e.g. chinese cruise ship workers are no longer allowed to board many ships if they had been in the mainland)
ReplyDeleteThis is an interesting read because I would not always consider the economic impact of such a disease. I wonder if companies employ some sort of insurance for these overseas employees, and if so, how those costs are contributing to the company's economic output. It's an interesting dilemma because quarantine halts economic growth yet is so essential to preventing the spread of the virus.
ReplyDeleteI actually just did a post on this topic before I saw that you also did a blog on it! I think it's really interesting that you consider it virus's impact on the tourism industry. I was mostly focusing on the overall economic impact and the effect on supply chains, so I didn't actually consider the effect on tourism.
ReplyDeleteI thought this article was very cool because I haven't thought about the economic impact of other countries. It is clearly an ongoing issue for countries that depend on tourism for its economy. Even outside of Asia, countries are probably more likely to be conservative overall towards accepting tourists, which is a hard decision. It's an interesting connection I didn't think to make.
ReplyDelete