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Coronavirus’ effect on world economy worsens

Published: (Updated: ) in Australian News by .

The coronavirus outbreak’s impact on the world economy as grew more alarming, even after President Donald Trump denounced criticism of his response to the threat.

The coronavirus outbreak's impact on the world economy grew more alarming, even after President Donald Trump denounced criticism of his response to the threat as a "hoax" cooked up by his political enemies.

China's manufacturing plunged in February by an even wider margin than expected after efforts to contain the coronavirus outbreak shut down much of the world's second-largest economy, an official survey showed.

The survey, coming as global stock markets fall sharply on fears that the virus will spread abroad, adds to mounting evidence of the vast cost of the disease that emerged in central China in December and its economic impact worldwide.

The monthly purchasing managers' index issued by the Chinese statistics agency and an industry group fell to 35.7 from January's 50 on a 100-point scale on which numbers below 50 indicate activity contracting.

How Japan has been affected

Japanese Prime Minister Shinzo Abe announced a 270 billion yen ($3.8 billion) emergency economic package to help fight the virus as he sought the public's support for his government's fight against the outbreak.

Mr Abe said at a news conference that Japan is at critical juncture to determine whether the country can keep the outbreak under control ahead of the Tokyo summer Olympics.

Mr Abe, whose announcement this past week of a plan to close all schools for more than a month through the end of the Japanese academic year sparked public criticism, said the emergency package includes financial support for parents and their employers affected by the school closures.

"Frankly speaking, this battle cannot be won solely by the efforts of the government," Mr Abe said Saturday (local time).

"We cannot do it without understanding and cooperation from every one of you, including medical institutions, families, companies and local governments."

How the Middle East is responding

Iran is preparing for the possibility of "tens of thousands" of people getting tested for the virus as the number of confirmed cases spiked again Saturday, an official said, underscoring the fear both at home and abroad over the outbreak in the Islamic Republic.


The virus and the COVID-19 illness it causes have killed 43 people out of 593 confirmed cases in Iran, Health Ministry spokesman Kianoush Jahanpour said.

The new toll represents a jump of 205 cases – a 150 percent increase from the 388 reported the day before.

Earlier Saturday, Bahrain threatened legal prosecution against travellers who came from Iran and hadn't been tested for the virus, and also barred public gatherings for two weeks.

Saudi Arabia said it would bar citizens of the Gulf Cooperation Council from Islam's holiest sites in Mecca and Medina over concerns about the virus' spread.

The GCC is a six-nation group including Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

On Thursday, Saudi Arabia closed off the holy sites to foreign pilgrims over the coronavirus, disrupting travel for thousands of Muslims already headed to the kingdom and potentially affecting plans later this year for millions more ahead of the fasting month of Ramadan and the annual hajj pilgrimage.

Measures taken by the US

Meanwhile, a man has died in Washington state of COVID-19 marking the first such reported death in the United States.

Despite anxieties about a wider outbreak in the US, Mr Trump has defended measures taken and lashed out Friday at Democrats who have questioned his handling of the threat.

At a political rally Friday night in North Charleston, South Carolina, Mr Trump asserted that Democratic complaints about his handling of the virus threat are "their new hoax", echoing similar past complaints by the president about the Russia investigation and his impeachment.

Mr Trump accused Democrats of "politicising" the coronavirus threat and boasted about preventive steps he's ordered in an attempt to keep the virus from spreading across the United States.

Shortly before Mr Trump began to speak, health officials confirmed a second case of the virus in the US in a person who didn't travel internationally or have close contact with anyone who had the virus.

The list of countries touched by the virus has climbed to nearly 60. More than 85,000 people worldwide have contracted the virus, with deaths topping 2900.

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The impact on Asia

Even in isolated, sanctions-hit North Korea, leader Kim Jong Un called for stronger anti-virus efforts to guard against COVID-19, saying there will be "serious consequences" if the illness spreads to the country.

China has seen a slowdown in new infections and on Saturday morning reported 427 new cases over the past 24 hours along with 47 additional deaths. The city at the epicentre of the outbreak, Wuhan, accounted for the bulk of both.

The ruling party is striving to restore public and business confidence and avert a deeper economic downturn and politically risky job losses after weeks of disruptions due to the viral outbreak.

South Korea, the second hardest hit country, reported 813 new cases on Saturday – the highest daily jump since confirming its first patient in late January and raising its total to 3150.

Streets were deserted in the city of Sapporo on Japan's northernmost main island of Hokkaido, where a state of emergency was issued until mid-March. Seventy cases – the largest from a single prefecture in Japan – have been detected in the island prefecture.

Reactions in Europe

The archbishop of Paris asked all of the French capital's parish priests to change the way they administer communion to counter the spread of the coronavirus.

Bishop Michel Aupetit instructed that priests no longer put the sacramental bread in the mouths of worshippers celebrating communion and instead place it in their hands.

Virus terminology explained

He also asked that worshippers not drink wine directly from a shared chalice, and that sacramental bread instead be dipped in wine.

The bishop's instructions were listed in a statement Saturday from the Paris diocese.

It said a Paris priest tested positive for the virus on Friday after returning from Italy.

The head of the World Health Organization on Friday announced that the risk of the virus spreading worldwide was "very high", while UN Secretary-General Antonio Guterres said the "window of opportunity" for containing the virus was narrowing.

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Stock markets around the world plunged again Friday. On Wall Street, the Dow Jones index took yet another hit, closing down nearly 360 points.

The index has dropped more than 14 percent from a recent high, making this the market's worst week since 2008.

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Widespread closures

In Asia, Tokyo Disneyland and Universal Studios Japan announced they would close, and events that were expected to attract tens of thousands of people were called off, including a concert series by the K-pop group BTS.

Tourist arrivals in Thailand are down 50 percent compared with a year ago, and in Italy – which has reported 888 cases, the most of any country outside of Asia – hotel bookings are falling and Premier Giuseppe Conte raised the spectre of recession.

Assuming there are many more cases with no or very mild symptoms, the rate "may be considerably less than one percent", US health officials wrote in an editorial in the journal.

That would make the virus more like a severe seasonal flu than a disease similar to its genetic cousins SARS, severe acute respiratory syndrome, or MERS, Middle East respiratory syndrome.

Given the ease of spread, however, the virus could gain footholds around the world and many could die.

Coronavirus myths debunked

Europe's economy is already teetering on the edge of recession. A measure of business sentiment in Germany fell sharply last week, suggesting that some companies could postpone investment and expansion plans.

China is a huge export market for German manufacturers.

Economists have forecast global growth will slip to 2.4 percent this year, the slowest since the Great Recession in 2009, and down from earlier expectations closer to three percent.

For the United States, estimates are falling to as low as 1.7 percent growth this year, down from 2.3 percent in 2019.

But if COVID-19 becomes a global pandemic, economists expect the impact could be much worse, with the US and other global economies falling into recession.

Article was reproduced with permission from AP.

Source: 9News

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