China virus could cost world Rs18,534 bn

CANBERRA: The global cost of the coronavirus could be three or four times that of the 2003 SARS outbreak that sapped the world’s economy by $40 billion (Rs6,176b billion), according to the economist who calculated that figure.

The sheer growth in the Chinese economy over the last 17 years means the global health emergency triggered by the coronavirus outbreak has far greater potential to gouge global growth, according to Warwick McKibbin, professor of economics at the Australian National University in Canberra. “It’s just a mathematical thing,” McKibbin said in a phone interview. “Most of the GDP loss that we saw in the SARS model, and in reality, was China slowing down.

And so, with China much bigger, you’d expect the billions would be much bigger,” reported foreign media.

While difficult to pinpoint a precise cost as the crisis is still unfolding, the impact will be experienced mostly through changes in “human psychology,” he said. “Panic is what seems to be the biggest drain on the economy, rather than deaths.”

Markets have been whipsawed by panic, Paris-based Amundi Asset Management said in a Jan. 29 note. Chief Investment Officer Pascal Blanque and his deputy Vincent Mortier said the novel coronavirus provided the trigger for a pause in a stock market rally that began in October.

McKibbin’s forecasts are in line with those of other analysts.