Economic Effects Of Coronavirus On Various Countries

Hassan Maishera - March 13, 2020

Coronavirus Affects Global Economy

In the year of the US presidential elections, the Coronavirus outbreak has been the major news so far this year. What started in China has grown to become a global pandemic. The economic effects of Coronavirus have led to the financial authorities taking measures to stop a global financial crisis.

As more cases are reported globally and the mortality rate increasing recently, it is interesting to see how the virus affects different economies and what the governments are doing to protect their financial markets.

Here, we will look at the different actions taken by major central banks across the world as they aim to combat the economic effects of the virus. We will also discuss the latest economic forecasts regarding Coronavirus’s potential economic impact.

Economic Effects Of Coronavirus So Far

The Coronavirus outbreak has hit the United States stock market in recent weeks. On February 27, the market experienced its biggest one-day fall since the 2008 financial crisis. The Dow Jones industrial average slumped by 1,190 points. However, the market has seen an uptick recently. This is despite the number of cases in the US surpassing the 100 mark, with three confirmed deaths.

China accounts for a third of manufacturing globally, and it is currently the largest exporter in the world. Activities have slowed down since the outbreak of the virus during the Chinese New Year.  According to NASA, pollution-monitoring satellites had detected a significant drop in nitrogen dioxide in China, indicating that most factories remain closed.

This has affected other larger global companies such as Apple, Diageo, JCB, Nissan, Tesla, and others, who depend on China to manufacture most of their components.

Europe is another region that is increasingly affected by the virus. Italy, France, and other major countries in the EU have been affected so far. This saw the FTSE 100 record losses late last month. This is worst it has seen since the Eurozone debt crisis in 2011.

So far, in 2020, the Dow Jones is down by 7.5%, Shanghai lost 2.9%, Nikkei is also down by 9.1%, while the FTSE 100 has lost 11% of its value.

More countries like South Korea, Japan, and others are taking steps to curb the spread of the disease. Some critical steps include shutting down schools, banning travel, and postponing major sporting events.

Estimated Economic Impacts Of Coronavirus

China is set to be massively affected by the virus outbreak this year. According to economists polled by Reuters, China’s growth rate could drop to 4.5% in the first quarter of the year, down from the 6% it recorded in the previous quarter. This would be the slowest GDP growth for the country since the financial crisis of 2008.

Standard Chartered added that the virus could affect roughly 42% of the economic activities in China. Chinese airlines are currently grounding planes and could lose about $12.8 billion this year. The global airline sector has suffered significant setbacks so far this year. It is expected to lose $29 billion this year.

The global economy is growing at its slowest rate since the financial crisis of 2008. Data obtained from the Organisation for Economic Cooperation and Development (OECD) shows that the global economic growth in 2020, is set to be around 2.4%, down from the 2.9% forecasted in November. The analysts believe that it could drop to 1.5% if the virus lasts longer and becomes more intensive.

The US GDP growth could slump below 2% this year, down from the previous estimate of 2.4%. Other major economies, such as Italy, France, the UK, Japan, and Germany, would all be negatively affected by the virus this year.

Central Banks Moves To Combat Economic Effects Of Coronavirus

Central banks across the world are making moves to combat the economic effects of the virus. The United States Federal Reserve made its first emergency rate cut since the financial crisis on March 3. The Federal Reserve slashed interest rates by half a percentage point in an attempt to boost the US economy amidst the ongoing coronavirus outbreak.

This is the most significant one-time cut by the Fed since the 2008 financial crisis. The new interest rate now stands between 1% and 1.25%. Fed Chair Jerome Powell expects the US economy to fully recover once the outbreak ends.

The G7 finance ministers and central bank representatives came out to assure the public that they are discussing the appropriate response to the outbreak. The Bank of Japan came out on Monday to say that it would inject liquidity into its markets. The BOJ could also increase asset purchases as a way to cushion the effects of the virus outbreak.

Another central bank to cut interest rates is Australia. The Reserve Bank of Australia March 3, revealed that it has slashed interest rates by 25 basis points. This is down to a record low of 0.5%. This is in response to the coronavirus outbreak, which is so far having a massive effect on the country’s economy.

Malaysia also cut its rate to a decade low to mitigate the effects of the virus outbreak. The 25-basis point cut has seen interest rates in the country drop to 2.5%, the lowest in over a decade.

The Bank of England (BoE) governor, Mark Carney, has also indicated that the UK is ready to join other apex banks around the world to roll out policies that would soften the impact of the Coronavirus. However, the bank is yet to announce any measures on this front.

Economic Effects Of Coronavirus: Closing Thoughts

The Coronavirus outbreak has been the major news so far this year as it has grown to become a global pandemic. The virus outbreak is causing economic growth to slow down in the US, China, Europe, and other major economies. If you wish to read and find out more about the economic effects of the Coronavirus, you should subscribe to the Stock Dork Alerts. We provide traders with a steady stream of stock market news and analysis that will help keep them informed on everything happening in the world of Wall Street. Plus, we write our reports in plain English, so they’re easy to understand. After just a few weeks reading Dork Alerts, you’ll sound like the smartest guy at the water cooler. Sign up today and get a jump on the New Year with our 2020 Growth Stock Guide, it’s yours free when you join. Click here to join and claim your free copy now.


Hassan Maishera is a cryptocurrency expert and a Stock Dork freelance contibutor.


  1. Amadi Progress says:

    Good one Hassan, please give us an update of the global economy if there has been any change so far, and what is the date of Nigeria and other African countries in this struggle?

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