Rabobank reports on possible global recession by 2019 nCov outbreak (updated 12th Feb.)

With over 700 deaths and 31,211 people contagiated in Mainland China the Government encouraged companies on 7th Feb. to resume production while avoiding contagion

Eva González Beijing (PRC), 8 February, 2020

Updated 08/02/2020/ 20:00 h
Updated 09/02/2020/ 02:03 h
Updated 10/02/2020/ 02:50 h
Updated 11/02/2020/02:40 h
Latest update 12/02/2020/02:50

The spread of the New Coronavirus not only is a threat for human lives, an this is the main worry for all lof us, but also may become a national and global problem for the supply chains in many industries if companies in the PRC are not able to resume production in time.

Quarantine and isolation may be the answer to mitigate, even cut nCov contagions, but no way is an answer for factories and logistics to keep active.

The European Central Bank President, Christine Lagarde quoted last Wednesday in Paris the 2029 2019 nCov as one of the uncertainties menacing EU economic growth at the same level as other global threats such as US-PRC trade war.

Christine Lagarde (ECB President) © ECB

“Over the last two years, the euro area economy has been quite resilient to global shocks, with our accommodative monetary policy supporting employment and consumption.
And, though GDP growth in the last quarter was weak, it was broadly in line with our expectations.
But while the threat of a trade war between the United States and China appears to have receded, the coronavirus adds a new layer of uncertainty. So we’re continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy, ” she said.

A hard and long lasting stop in Chinese production lines and in Chinese economy in general not only would affect develped economies, but also a great part of developing countries that depend on Chinese industrial purchases and investments on Chinese transport and tourists. Shortages in Chinese supplies could result in a soar of prices as well.

Rabobank foresees a global recession if the 2019 nCov outbreak persists

“…if the coronavirus outbreak persists, the effects will be felt though global growth, trade and global value chains as well as in specific sectors such as transport and tourism. All in all, with global economic growth already in a deceleration phase, the virus is another risk that supports our view that we will see global recession this year and that central banks of developed markets will probably have more work to do in terms of stimulus,” underlines Rabobank in an special report on this issue.

The Dutch bank explains that compared to the 2002/2003 SARS outbreak, the global economic effects of the 2019 coronavirus are likely to be more severe because of three mein facts: a) China is much bigger, b) more intertwined with the global economy and c) more vulnerable than it was 17 years ago.

© Rabobank. To enlarge the image, just click on the photo.

a) Much bigger: While in 2003 China represented only about 7.5% of world GDP, now the Asian Country now represents more than 20%. An economic effect on China is likely to have more global consequences that it would have had 17 years ago, therefore.

b) More intertwined in the world economy: China international air traffic was only 5 million in 2000, while it is almost 55 million now. Chinese tourists account for a large part of tourism in, for example, Thailand (30%) and Australia (15%). China has also become a major part of global value chains, which (if disrupted) could have major implications for international companies.

c) More vulnerable: China has much higher debt, trade tensions with a major trading partner and its growth has been steadily slowing down for a number of years. These factors provide for a weak starting point to face such a crisis.

PRC Government urges companies to resume work

Chinese Premier Li Keqiang , also a member of the Standing Committee of the Political Bureau of the CPC Central Committee and head of the leading group of the CPC Central Committee on the prevention and control of the novel coronavirus outbreak, presided over a governmental meeting on the meassures and strategies to be adopted to control the spread of the New Coronavirus (nCov).

According to an official statement issued after the meeting, enterprises are encouraged to innovate the way they operate, reduce staff flows in workplaces, and let staff work in shifts to ensure full-load production.

FAW-Volkswagen production facility at Qingdao. © FAW-Volkswagen.

The statement establishes that a liaison system should be introduced in key enterprises to supervise full-sail production, and to address problems featuring lack of machines, workers and funds.
The document also says that a security plan for coal, electricity, petrol, and gas should be made, says the document, to avoid that centralized production resumption would result in regional and periodic shortages and soaring prices.

Those at the meeting urged strengthening the responsibilities of local governments and enterprises, and continuing epidemic prevention and control work after resuming production.

They also agreed that targeted prevention and control measures should be taken and a protective system for staff in workplaces should be improved and implemented.

Information on population flow should be identified, and seriously affected regions should clarify the conditions for the emplyees’ return to work .

People with masks waiting for their flight at the International Airport Shenzhen Bao (China). Image UN/Jing Zhang.

Underlining the connection between regions with population flow, the document also calls railway and civil aviation departments to coordinate their transport capacity and try to do their best to arrange that passengers sit in the transports with at least one seat apart. Workers are encouraged to return to work at different times.

Traffic restrictions for private vehicles in regions involved can be suspended or changed according to local situations, the final estatement warns.

Around 1-2% temporary decline in GDP, and Chinese automotive industry at risk of permanent dammage

The main concern from the economic point of view is if the 2019 nCov outbreak can leave a permanent tack on the Chinese economy or e ven in the global economy, should the contagion spreads further.
The World Health Organisation considers that the 2019 nCov outbreak is nowhere near a pandemic, which would be the worst case scenario and the one that could leave a permanent mark both on the Chinese and the global economy.

The nCov is still far from the Plague in the mid-14th century (black pest) or the Spanish flu in 1918-1920. Said that one must take into account, always following Rabobank’s report that the debt load of Chinese non-financial corporates has increased over the past 20 years to more than 150% of GDP. And these high indebted companies rely on high economic growth to keep servicing this debt.

If this high growth levels sink, even for a relatively modest short period of time, such highly indebted companies could find it difficult to pay back their debts, without massive government support. The Government might provide for the needed support, for example by letting the Chinese central bank inject liquidity in the system, although in this case PRC economy would risk bearing even higher inflation rates.

An example of high indebted sector in china is automotive manufacturing.
The Hubei province (where most of the affected cities are located) represents a sizable part of Chinese GDP (4%). Its capital (Wuhan) is an important transportation hub and the second largest car manufacturer in China.

Dongfeng-Renault production line at Wuhan. © Renault.

Leaving aside risks that are not still a fact, economic growth in China in the first quarter of this year will get hurt since the virus outbreak coincides with the period surrounding the Chinese New Year (January 25th). A period of strong sales for retail.

Based on the SARS experience and on the information available right now, Rabobank considers a reasonable estimete a temporary decline in PRC’s economy of around 1-2% of its GDP. If this is largely offset by higher growth in the second half of 2020 the overall impact on annual GDP growth could still be relatively limited (to a few tenths of a percentage point), says the Dutch bank.

What happens beyond the first quarter depends on the severity of the virus outbreak, the Chinese government’s ability to contain it, and on government stimulus to make up for the economic damage.

Over  1112 people passed by in Mainland China and 1st death in Hong Kong, PRC Health Authorities report

Update on 11th February by the Health Commission (data as of 24:00 on Feb 10).-

As of 24:00 on Feb 11, the National Health Commission had received 1,113 deaths and 44,653 reports of confirmed cases in 31 provincial-level regions on the Chinese mainland and the Xinjiang Production and Construction Corps.

As of 24:00 on Feb 11, 77 confirmed infections had been reported in the Hong Kong and Macao special administrative regions and Taiwan province: 49 in Hong Kong (1 death), 10 in Macao (1 had been cured and discharged from hospital) and 18 in Taiwan (1 had been cured and discharged from hospital).

In the geografical area in Mainland China and by the time mentioned above they have been reported 2,015 new cases of confirmed infections (including 1,638 in Hubei province) – less than the 2,478 reported on 10th February- ; 3,342 new cases of suspected infections (including 1,685 in Hubei province), 871 new serious cases, and 97 deaths (94 in Hubei province, 1 in Henan province, 1 in Hunan province, and 1 in Chongqing). 744 patients were released from hospitals after being cured, including 417 in Hubei province. 30,068 people who had had close contact with infected patients were freed from medical observation.

In all 4,740 patients had been cured and discharged from hospital in mainland China. There still remained 38,800 confirmed cases (including 8,204 in serious condition) and 16,067 suspected cases. So far, 451,462 people have been identified as having had close contact with infected patients. A total of 185,037 are now under medical observation.
The PRC Health Commission points that the number of new serious cases is calculated by subtracting the number of serious cases in the previous day from the current number of serious cases. Serious cases may change in a range of ways, from becoming mild to fatal. On Feb 11, the number of serious cases in 12 provincial regions decreased by 44, while the number of serious cases in 8 other provincial regions including Hubei increased by 915, with 897 from Hubei.

Update on 11th February by the Health Commission (data as of 24:00 on Feb 10).-

As of 24:00 on Feb 10, the National Health Commission had received rconfirmation of 1,016 deaths in 31 provincial-level regions on the Chinese mainland and the Xinjiang Production and Construction Corps.

The Commission received a total of 42,638 reports of confirmed cases (reduced by 12 by Zhejiang province and increased by 1 by Jiangxi province after verification).
There still remained 37,626 confirmed cases (including 7,333 in serious condition) and 21,675 suspected cases. So far, 428,438 people have been identified as having had close contact with infected patients. 187,728 are now under medical observation.

As of 24:00 on Feb 10, there were 70 confirmed infections had been reported in the Hong Kong and Macao special administrative regions and Taiwan province: 42 in Hong Kong (1 death), 10 in Macao (1 had been cured and discharged from hospital) and 18 in Taiwan (1 had been cured and discharged from hospital).

On Feb 10, 31 provincial-level regions on the Chinese mainland as well as the Xinjiang Production and Construction Corps reported 2,478 new cases of confirmed infections (including 2,097 in Hubei province) -against 3,062 on 9th Feb.- , 3,536 new cases of suspected infections (including 1,814 in Hubei province), 849 new serious cases (including 839 in Hubei province), and 108 deaths (103 in Hubei province, 1 in Beijing, 1 in Tianjin, 1 in Heilongjiang province, 1 in Anhui province, and 1 in Henan province). 716 patients were released from hospitals after being cured, including 427 in Hubei province. 26,724 people who had had close contact with infected patients were freed from medical observation.

Update on 10th February by the PRC Health Commission (data as of 24:00 on Feb 9) confirms 908 deaths in 31 provincial-level regions on the Chinese mainland and the Xinjiang Production and Construction Corps.

The PRC National Health Commission had received 40,171 reports of confirmed cases (reduced by 87 by Hubei province, 1 by Jiangxi province, and 1 by Gansu province after verification).

In all 3,281 patients had been cured and discharged from hospital. There still remained 35,982 confirmed cases (including 6,484 in serious condition) and 23,589 suspected cases. So far, 399,487 people have been identified as having had close contact with infected patients. 187,518 are now under medical observation.

On Feb 9th, 31 provincial-level regions on the Chinese mainland as well as the Xinjiang Production and Construction Corps reported 3,062 new cases of confirmed infections (including 2,618 in Hubei province), 4,008 new cases of suspected infections (including 2,272 in Hubei province), 296 new serious cases (including 258 in Hubei province), and 97 deaths (91 in Hubei province, 2 in Anhui province, 1 in Heilongjiang province, 1 in Jiangxi province, 1 in Hainan province, and 1 in Gansu province). 632 patients were released from hospitals after being cured, including 356 in Hubei province. 29,307 people who had had close contact with infected patients were freed from medical observation.

In the Hong Kong and Macao special administrative regions and Taiwan province 64 confirmed infections had been reported as of 24:00 on Feb 9th: 36 in Hong Kong (1 death), 10 in Macao (1 had been cured and discharged from hospital) and 18 in Taiwan (1 had been cured and discharged from hospital).

A nurse measures the body temperature of a woman at Hubei TCM Hospital. Image by China News Service. Licensed under Creative Commons 3.0 through Wikimedia Commons.

-Update  by the PRC Health Commission on 9th February confirmed  deaths level by 2019 nCov in Mainland China at 811 people (a breaking point as this number exceeds that of the SARS.

Another 89 deaths were recognised, while they were reported less new cases, 2,656 against 3,656 in the report on 8th Feb.,  bringing the total infected people to  37,198 count.

Chinese health authorities said on Feb 8th  that they received reports of 3,399 new confirmed cases of novel coronavirus infection and 86 deaths on Feb 7 from 31 provincial-level regions and the Xinjiang Production and Construction Corps.

The overall confirmed cases on the Chinese mainland had reached 34,546 by the end of Feb 7 and 722 people had died of the disease.

A total of 2,050 patients infected with the novel coronavirus had been discharged from hospital after recovery by the end of Feb 7, Chinese health authorities announced on Feb 8.

Last Friday  PRC Health Authorities reported 3,143 new confirmed cases of novel coronavirus infection. There were 73 deaths on Thursday from 31 provincial-level regions and the Xinjiang Production and Construction Corps.

Among the deaths, 69 were in Hubei Province, one in Jilin, one in Henan, one in Guangdong and one in Hainan, according to China’s National Health Commission.

Another 4,833 new suspected cases were reported on Thursday, said the commission, besides the fact that 962 patients became seriously ill, and 387 people were discharged from hospital after recovery.

Confirmed cases of 2019 nCov affected people in Mainland China by PRC Health Authorities reached 31,161 by the end of 6th February and they reconise that 636 people had died of the disease.

By the end of Thursday, 24 confirmed cases had been reported in the Hong Kong Special Administrative Region (SAR), including one death, 10 in the Macao SAR and 16 in Taiwan.

People wearing face masks in a supermarket in East China’s Nanjing city. Photo, UN News/Li Zhang

A number of 4,821 patients remained at the end of last Thursday in severe condition in mainland China and 26,359 people were suspected of being infected with the virus. 1,540 people had left hospital after recovery.

The health Autorities informed that 314,028 close contacts had been traced. Among them, 26,762 were discharged from medical observation on Thursday, while 186,045 others are still under medical observation.

Following the data provided by the World Health Organisation (WHO) on 7th February, China has reported 637 deaths by 2019 nCov and 31 211 confirmed new cases. On Sturday 8th February in the morning they were confirmed over 700 deaths in mainland China, among them the two first foreighners, one coming to Japan and the other one coming from th USA.

Update by WHO on 8th February in the afternoon was 34, 598 confirmed cases in China, and 723 deaths

307 nCov cases confirmed outside China: Despite slight decline on 6th Feb, still soon to celebrate, said WHO official

To date, a total of 72 States parties of the UNWHO are implementing travel restrictions through official reports, official statements and the media. Of these 72 countries, WHO received just 23 (32%) official reports from their travel restrictions.

In a press conference at UN Headquarters in New York on Tuesday 6th February, UN Secretary-General António Guterres urged “a strong feeling of international solidarity, a strong feeling of support to China in these difficult circumstances and all the countries that might be impacted, and a strong concern to avoid the stigmatization of people that are innocent, and victims of the situation.”

Dr Michael Ryan, head of the World Health Organization’s Health Emergencies Programme said on 6th Faebruary in light of the slight decline on new contagions: “Although we are pleased that the numbers from today are the first day in which the overall numbers of confirmed cases reported from China have dropped, and so we are thankful, and I’m sure our colleagues on the frontline in China are thankful too”…“But it is very difficult to make any prediction relating to that. We are still in the middle of an intense outbreak and we need to be very careful on making any predictions.”

No new countries reported cases of 2019-nCoV in the past 24 hours. © World Health Organisation. To enlarge the image, just click on the photo.

UN WHO informed on 7th February that fight further spread of the new coronavirus (2019-nCoV) outbreak in China and globally, and protect states with weaker health systems, the international community has launched a $675 million preparedness and response plan covering the months of February through to April 2020.

WHO is convening a global research and innovation forum to mobilize international action in response to the new coronavirus that will be held in Geneva on 11th and 12th February.
Experts will build on existing SARS and MERS coronavirus research and identify knowledge gaps and research priorities in order to accelerate scientific information and medical products most needed to minimize the impact of the 2019-nCoV outbreak.

Guterres said last Tuesday that WHO had decided on declaring the global emergency over the new coronavirus “at the right moment” and had been very active in lending support to China and other countries grappling with cases.

“We are trying to mobilize our best capacities and best resources” he also told journalists, that no UN staff member has so far been infected.”

Dr Li, who first warned on nCov outbreak died last Friday by the virus and National Supervisory Commission starts off investigation

Dr Li Wenliang, one of the eight people who tried to warn about the novel coronavirus when it first emerged in Wuhan, has not been so lucky. Li, 33 years, died by nCov at 2:58 am on 7th February as officially reported by PRC Authorities.

Doctor Wenliang Li. frames from the UN World Health Organisation video informing and mourning his death by the 2019 nCov. To watch the video click on the ling we provide below at the end of this post.

Li, an ophthalmologist at the Central Hospital of Wuhan, warned through a post on WeChat last 30th December that he had seen a report that showed positive test results of SARS for seven patients.

Warning letter issued by the Wuhan Police Department ordering Li to stop “spreading rumors” about “SARS”, signed by Li and two officers. Li uploaded it to his Sina Weibo account. Image from Wikimedia Commons. To watch the original photo click here

On Jan 3, Li and the seven others were summoned by Wuhan police for “spreading fake information on the Internet”.

They were reprimanded but not fined or detained, according to Chinese police report.

“I was finally confirmed as being infected by the novel coronavirus,” Li wrote on Feb 1 on Weibo, adding a dog emoji. The post got more than 1.6 million thumbs-ups and over 400,000 netizens expressed their best wishes to him.

The large number of comments, including prayers that spread over Chinese social networks ended abruptly when the doctor’s death was officially confirmed says the Government  information on the case.

But the fact is that people in Mainland China, scandalised, mourns the doctor’s death in the streets and the same National Supervisory Commission (the Authority in charge of prosecuting corruption in the PRC) has decided to send an inspection group to Wuhan, the epicenter of the novel coronavirus outbreak, to investigate issues related to Dr. Li Wenliang.

Image over the headline.- .- People wearing face masks at China’s Chengdu Shuangliu International Airport.Photo, UN News/Jing Zhang

Related Eastwind links:

Coronavirus.- Chinese Authorities, confident in resuming production soon, while US Federal Reserve not so

Rabobank Economic report on 2019 nCov

World Health Organisation 2019 nCov data report as of 7th Feb 2020

2019 novel coronavirus.- The World Health Organisation declares the Public Health Emergency of International Concern

Related External links:

World Health Organisation video on Li Wenliang’s death

World Health Organisation nCov update.- Wuhan citizen reveals the real situation in Wuhan, the epicenter of the nCov outbreak

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