Economists are providing more and more information about the impact of the coronavirus on the Chinese and global economy. To predict the further development of events using Metatrader 5, it is necessary to carefully analyze all incoming information and pay attention to the general market mood.
In this article, Exness specialists will tell you what forecasts the experts give and what to expect from crucial exchange assets.
The Impact of the Epidemic on China and Its Trade Relations
The epidemic temporarily blocked many trade chains associated with China. The spread of the coronavirus began in this country, so the Chinese economic system has suffered severe damage. The region was quarantined, production was closed for long holidays, and transport routes were limited.
Currently, China has suspended the supply of intermediate products imported to other countries to produce their own goods or services.
Among other things, the coronavirus suspended new construction, which led to a reduction in export flows. The most significant losses are in
● South Korea
● Hong Kong
● Japan, and
● Australia, which is trading with China.
It should be taken into account that China is a significant participant in the metals, fuel, and ores market. The coronavirus has driven the prices of these commodities down, and a sustained bearish trend is projected.
The Chinese government is taking serious measures to protect the public and support financial markets. At the same time, it is possible that global price reductions will begin with the spread of the epidemic around the world. In particular, those products that are among the most prominent positions of Chinese imports and exports will suffer.
Forecast from the head of the WTO: the impact of the coronavirus on the economy
It is expected that the global market decline will begin in the coming weeks, but plans for meeting ministers in Kazakhstan remain. Recall that the meeting is scheduled for June 2023. The meeting will discuss deals on subsidizing agriculture, fisheries, and electronic trading. This event should bring together several thousand experts from different countries.
The importance of the successful outcome of the meeting cannot be overestimated because the result of this event will have an impact on the legitimacy and relevance of the WTO, which the collapse of the appeals system has shaken.
The blocking of appointments in the United States has negatively affected the World Trade Organization, and now its meetings are under threat.
Recently it became known that the Organization for Economic Cooperation and Development revised its analytical forecast for world GDP growth. In 2022, an increase of 2.9% was forecast, and now only 2.4% growth is expected.
This decline in growth is directly related to the coronavirus, which has dealt a severe blow to the international economic system. The epidemic is considered the most significant danger since the 2008 global crisis.
The Level of Falling Stock Markets will be 30-40%
German Central Banks have negative interest rates, but this is not a negative point for the investor. Government bond prices will continue to rise, and the depositor will be able to save money and increase it.
The coronavirus epidemic is not limited to the territory of China and is global. The spread of the virus has not yet ended, and as a result, it can damage the entire global economy. If the Chinese economic system declines in the first quarter and recovers in the second, it will grow by only 2-4% over the year, while market expectations were at the level of 5.5%. This means a recession for China and an economic shock for the rest of the world.
The Fed Cut the Key Rate on an Emergency Basis
The US president’s team began considering potential actions to keep the US economy from collapsing last week. Among the comprehensive measures was pressure on the Federal Reserve to reduce interest rates and taxes urgently.
The actions of the American government will be aimed at improving the situation in the health field and the economy. In particular, it is planned to adopt a whole package of economic incentives, which will directly depend on reducing tax deductions.
Australian Central Bank Cuts Rates to Record Levels
Global markets expect other Central Banks also to ease monetary policy to combat the consequences of the coronary virus.
The Australian Reserve Bank has already cut its interest rate from 0.75% to 0.5%. Thus, he lowered borrowing money costs and provided additional opportunities for local businesses.
Experts are confident that the coronavirus epidemic significantly affects Australia’s economic system. At the moment, it is difficult to predict the extent of the consequences and the duration of the bearish trend.
The Board of Governors continues to monitor the current situation, assessing the impact of the coronavirus epidemic on the economy. The central bank is ready to continue its easing policy to support the Australian financial system.
The European Central Bank Is Ready to Take the Necessary Measures
Earlier, the vice chairman said that the spread of the virus adds new uncertainty to forecasts about the prospects for economic development. The ECB is committed to remaining vigilant and following world events closely.
The European regulator may adjust its monetary policy if there is an urgent need to change interest rates.
The epidemic poses a real threat not only to the local but also to the international economy. The American and Japanese governments are ready to provide sufficient liquidity to ensure stability in the financial markets.
The task of the government is to support operations for the purchase and sale of assets. According to Exness, a representative of the Bank of England also said that he would take the necessary measures to maintain financial and monetary stability.
Impact of the Epidemic on Economic Sectors
At the moment, leading analysts are striving to analyze and give a rough estimate of the coronavirus epidemic, affecting large corporations’ income. As a rule, experts are inclined to lower the predicted results because the outbreak of a new virus harmed global stock markets.
Crisis phenomena were also reflected in Asian securities. The decrease in index indicators was due to the rapid spread of coronavirus outside China. Cases of infection in South Korea, Italy, and Iran have become more frequent.
At the moment, Exness experts identify several industries that have been hit the hardest by the epidemic. Among them:
● Tourism was under threat because many destinations in China were blocked. Tourists are afraid to cross the border because there is a risk of infection. Against this background, many tourist trips have been canceled or rescheduled.
● Energy carriers are used much less frequently due to travel bans in China. In particular, oil prices, which were used to create gasoline, fell.
● Technologies are in less demand because the population, first of all, cares about their safety.
● The automotive industry will lose about 2.5% of annual revenue. The negative dynamics are directly related to disruptions in the supply chain. The loudest drop is expected in the Chinese automotive market. In the first weeks of February, sales fell by 92%.
Experts should not forget that China plays a vital role in the global economy. The most significant increase in the incidence is observed in the territory of China, and the local government is obliged to take emergency measures. Analysts fear 2022 could end with a record decline in key economic indicators.
The slowdown in global economic growth may reach 0.5 – 1%.
To make a more accurate forecast, it is necessary to track the speed of the spread of the coronavirus and the success of pharmaceutical companies. Developing a cure for a dangerous disease can significantly improve the situation and accelerate the return to average economic growth. The fall in crucial indices in a global epidemic will exceed 50 percentage points.
