One economist warned that if the coronavirus becomes a pandemic the world could face a recession as deep as the one during the 2008 financial crisis.
Last week, the consultancy Oxford Economics said the coronavirus could wipe $1.1 trillion in value off the global economy if it became a pandemic that spread beyond Asia,"The risk that coronavirus could trigger a global recession cannot be written off," Cailin Birch global economist at the Economist Intelligence Unit , told.
"The economic damage of the virus is mainly through fear of the virus. Italy's quarantine measures led investors to fear that fear would spread to European consumers," Donovan said.that fear has the biggest economic impact because it changes the behavior of people and policymakers. He said the risk of recession is present"but at this stage still relatively low" and the general consensus is the virus will be a relatively short-lived issue.
"If consumers become afraid then weakening consumer spending could do damage to the economy," Donovan told"If the fear is geographically confined, and the virus effect is short-lived then the risk of a recession is low. "Above all, this is a human tragedy, but it also has a negative economic impact. I reported to the G20 that even in the case of rapid containment of the virus, growth in China and the rest of the world would be impacted.
Less production in China is bad because it impacts supply chains. But while fear has reduced demand for some services, such as travel and certain leisure activities, housebound people have turned to internet shopping instead and are spending more online.
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