A conductor sanitises a passenger in Nairobi on Monday in war on coronavirus. Kenya reported two more cases of the viral infections on Sunday. PHOTO | EVANS HABIL To assess the possible impact of the coronavirus on the economy, it is important not only to focus on the epidemiological profile of the virus but also on the ways that consumers, businesses, and governments may respond to it.
Covid-19 will most directly shape economic losses through supply chains, demand, and financial markets, affecting business investment, household consumption, and international trade. And it will do so both in traditional, textbook supply-and-demand ways and through the introduction of potentially large levels of uncertainty.
An epidemic that began in the depths of China’s Hubei province is spreading rapidly.
There are now significant outbreaks from South Korea to Italy and Iran, and the first deaths have been reported in America.
The virus has disrupted the global supply of goods, making it harder for Kenya firms to fill orders. It will also affect workers due to a lack of supplies, reducing labour supply and slow down the demand for Kenya products and services.
The covid-19 outbreak is affecting supply chains and disrupting manufacturing operations around the world are increasing daily. But the worst is yet to come, the peak of the impact of Covid-19 on global supply chains will occur in mid-March, forcing thousands of companies to throttle down or temporarily shut assembly and manufacturing plants in China and other markets.
The most vulnerable companies are those which rely heavily or solely on factories in China for parts and materials such as electrical. The activity of Chinese factories has fallen in the past month and is expected to remain depressed for months.
Disruptions to global supply chains are one of the clearest effects of the coronavirus. There have already been significant disruptions, with the list of manufacturers outside of China forced to decrease production in their plants growing longer every day.
China shocks have spread across global financial markets before, including the surprise yuan devaluation in 2015. The coronavirus is repeating the pattern, and on a larger scale, as equities plunge around the world and deliver knock-on blows to household wealth and business confidence. As the world grapples with the virus, the economic impact is mounting, with the possibility of another global financial crisis. China is the world’s second-largest economy and leading trading nation, so economic fallout from the virus also threatens global […]