The stock market had its worst week since 2008, signaling that one of
the longest expansions in history could be ending. Policymakers said they were
ready to act.
Investors, fearing that the spread of the coronavirus is tipping the
global economy into a recession handed the stock market its largest weekly
loss since the 2008 financial crisis on Friday amid worries that one of the
longest economic expansions in history may be coming to an end.
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are many ways to measure the costs of coronavirus. There have now been more
than 24,000 officially reported cases, and nearly 500 people have died, but
we’d be wise not to have much faith in these figures. A report from the Lancet
estimated that as of Jan. 25 the true number of coronavirus cases in Hubei
province, which includes the city of Wuhan, was not 761, as officially
reported, but 75,815.
The impact on China’s economy will be considerable. Quarantine and
internal border controls have been imposed, and local officials are now
overcompensating in response to criticism from Beijing that they were slow to
respond to the initial outbreak. Businesses and schools are likely to remain
closed for weeks. Economic activity in many Chinese cities is sharply reduced.
There is also the mounting economic cost for the entire global economy.
The outbreak of severe acute respiratory syndrome (SARS) in 2003 knocked one to
two percentage points off China’s GDP that year, which then cost one-quarter to
one-third of a percentage point in global growth, according to estimates. The
larger number of infections from the coronavirus suggests the impact could be
more severe this time for both China and the world. What happens in China
matters more than ever for the rest of us. Its share of the global economy has
surged from 8% in 2002 to 19% today, and it’s now the world’s second-largest
economy.
