Sin Chew Daily

The rapid spread of 2019 novel coronavirus has not only posed a severe threat to people's health but will also have negative implications on the global economy. IMF managing director Kristalina Georgieva pointed out that the viral outbreak could slow the global economy as well as impact the production and supply chains in the near term. Malaysia will not be spared and it is imperative that the government come up with a comprehensive stimulus package to offset the downward pressure on the local economy.

The US-China trade war has already had a major impact on the global economy. The two superpowers have just signed the first phase of trade deal that would somewhat mitigate the impact, but with the Wuhan virus now spreading fast across China and beyond, the global economy finds itself once again under tremendous stress. Do bear in mind that the world's economy has now moved into the slow lane and could likely headed for a recession. The viral outbreak will further dampen the economy and severely bruise the already sluggish economic momentum.

Studies show that 2019-nCoV will have a short-term but serious impact on the Chinese economy. The country's first quarter GDP could be slowed remarkably from 6% in the last quarter of 2019 to only 4.5%. If the outbreak lasts longer than anticipated and is contained only after the second quarter, China's whole year growth could decelerate to 5.6%. While the outbreak's effects on the economy will take time to assess, its impact on global equity markets is immediate and obvious. The Chinese stock markets nosedived on the first trading day after the Lunar New Year holidays, and the shock was felt elsewhere on the continent, with Bursa down by a hefty 13.45 points at one point.

The coronavirus' impact on the global economy is conspicuous, in particular F&B, retail and tourism-related services. It is essential for the government to sense the urgency of this matter and adopt the necessary measures to weather the impact. The government's targets of 30 million tourists and RM100 billion in tourism receipts for Visit Malaysia Year 2020 will very unlikely be met as a consequence of the outbreak. The authorities need to come to terms with the reality and revise the targets or explore new sources of tourist arrivals instead of sticking blindly to earlier goals.

Finance minister Lim Guan Eng has said the government will continue to evaluate the effects the coronavirus will have on the local economy, and that the government may introduce new stimulus packages whenever necessary. With the outbreak now intensified, such a need has come all the more relevant.

In the meantime, the Chinese government is actively fighting the war against the virus, so are all other nations across the globe with the hope the outbreak could be contained within the shortest time possible so that the global economy could be put back on the path of growth.