Global economies and businesses are facing one of the most difficult times in history as countries on three continents reported their first cases of the coronavirus last weekend as the world prepared for a pandemic of the disease with investors dumping equities in expectation of a global recession.
Share prices were on track for the worst week since the global financial crisis in 2008 as virus-related disruptions to international travel and supply chains fuelled fears of recession in the United States and Europe.
Ratings agency Moody’s said a pandemic usually taken to mean a disease spreading quickly in different places would trigger global and recessions in the first half of the year.
Asian stocks tracked a plunge on Wall Street, where the benchmark S&P 500 index fell more than 4 percent on Thursday, extending a rout that has sliced more than 10 percent from its closing peak on February 19.
For Norihiro Fujito, chief investment strategist at Mitsubishi UFJ Morgan Stanley Securities “The coronavirus now looks like a pandemic. Markets can cope even if there is big risk as long as we can see the end of the tunnel. But at the moment, no one can tell how long this will last and how severe it will get”.
Mainland China where the virus originated late last year reported 327 new cases, the lowest since January 23, taking its tally to more than 78,800 cases with almost 2,800 deaths.
But four more countries reported first cases taking the number of countries outside China with infections to 55; where about 3,700 cases have killed about 70 people. Countries other than China are accounting for about three-quarters of new infections.
An Italian man who arrived in Nigeria this week aboard a flight was confirmed as the first coronavirus case in Africa’s most populous country and another person who returned on a flight from Iran became the first in New Zealand.
In Eastern Europe, Belarus and Lithuania reported their first cases. World Health Organization (WHO) Director General Tedros Adhanom Ghebreyesus said all nations should prepare.
“This virus has pandemic potential,” Tedros said in Geneva recently. This is not a time for fear. This is a time for taking action to prevent infection and save lives now”.
“It’s a crisis of confidence for the markets in particular and for investors because we don’t know when this is going to end,” Al Jazeera economics editor Abid Ali said.
“It’s a wait-and-see situation,” he said, noting that US markets have seen a correction, or a 10 percent drop, but have yet to decline 20 percent, which would indicate a bear market.
The difference between 2008 and now, however, is that central banks were previously closely watched for interest rate changes. “The Fed (US Federal Reserve) can’t come in and rescue the world from this particular crisis,” Ali said.
In Asia, investors are bracing themselves for potential bear markets in Indonesia and the Philippines while Malaysia’s key stock market index has been in bear territory since the start of the week due to political turmoil.
In Europe, France’s number of reported cases doubled, Germany warned of an impending epidemic and Greece, a gateway for refugees from the Middle East, announced tighter border controls.
The death toll in Italy, Europe’s worst-hit country rose to 17 and the number of people who tested positive for the illness increased by more than 200 to 655. Germany has about 45 cases, France about 38 and Spain 23, according to a Reuters count.
Tedros said in Geneva that Iran, Italy and South Korea were at a “decisive point” in their efforts to prevent a wider outbreak.
South Korea has the most cases outside China, and reported 256 new infections on Friday, bringing its total infections to 2 022.
The head of the WHO’s emergency program, Mike Ryan, a medical doctor said Iran’s outbreak may be worse than realised. It has suffered the most deaths outside China being 26 from 245 reported cases.
MIKE OCHONMA, With Agency reports
