The economic toll of the coronavirus – from iPhones to solar panels to tourism

Feb 21, 2020

A security guard wearing a protective suit and a face mask stands as he holds a thermometer in front of the entrance to the China Transinfo Technology Co,in the morning after the extended Lunar New Year holiday caused by the novel coronavirus outbreak, in Zhongguancun Software Park, in Beijing, China February 10, 2020. REUTERS/Tingshu Wang - RC2GXE9XNYHB

The novel coronavirus COVID-19 is having a long economic reach, in China and beyond. Image: REUTERS/Tingshu Wang

John Letzing

Digital Editor, World Economic Forum

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COVID-19

COVID-19 has potentially serious implications for the global economy.
Apple revised its revenue guidance, due to a slowdown at manufacturing sites in China as well as reduced demand by Chinese consumers.
The spreading coronavirus is taking a toll on economic players around the world, from farmers and ranchers in the Americas to manufacturers of solar panels in India to tourism workers across Asia.

For many people outside of China – not least the sizeable number who have a retirement account that includes Apple stock – the impact of COVID-19 got a lot more tangible when the iPhone maker had to revise its revenue guidance earlier this week as a result of the spreading coronavirus.

While much of the world’s attention is rightly focused on the human toll of COVID-19 – including the 1,873 deaths reported as of 18 February – the economic toll of the outbreak also has potentially disastrous implications.

Have you read?

China, home to 99% of confirmed cases so far, has been dubbed the “world’s factory” due to the significant portion of global manufacturing that now typically takes place there. An estimated 5 million jobs in China rely on Apple manufacturing alone, and the company partly blamed slower-than-anticipated activity at its China-based iPhone manufacturing sites for the revenue warning.

Manufacturing value added, China vs. world Image: World Bank

Apple also blamed the warning on slowed demand for its products among China’s increasingly affluent consumers, due to store closures and reduced operating hours. And it’s not just Apple that’s been hurt by the sudden constriction of China’s massive consumer market. From South American ranchers to Vietnamese rice exporters and American farmers, a broad range of global economic players are starting to feel related effects. Thailand, where more than one-quarter of all visiting vacationers last year were Chinese, has seen its tourism industry suffer, for example.

GDP per capita, China vs. World Image: World Bank

While there has been some debate about whether the coronavirus has peaked, the contours of its vast economic toll are still taking shape.

For more context, here are links to more reading, courtesy of the World Economic Forum’s Strategic Intelligence platform:

India’s aiming for 100 gigawatts of operational solar power capacity by 2022. However, China accounts for nearly 80% of the solar cells and modules imported to the country – and COVID-19 means that many of those imports have now been put on hold. (CleanTechnica)
Singapore may view itself as an oasis of calm prosperity in a turbulent region, but all it took was one viral image of a local woman in a face mask hoarding noodle packets to kick off a storm of coronavirus-related anger and recrimination in the city state. (Australian Strategic Policy Institute)
Indonesia once aimed to attract 10 million Chinese tourists per year. Now, it’s poised to lose about $4 billion in tourism related revenue as a result of COVID-19. Already, thousands of Chinese-speaking tour guides have lost their jobs, and tensions between the country and China are running high. (The Diplomat)
On 19 January, Myanmar officially marked the beginning of the “Myanmar-China Bilateral Cultural and Tourism Year,” partly in response to a sharp decline in tourists visiting the country from the US and Europe. Two days later, the World Health Organization published its first COVID-19 situation report, noting 278 confirmed cases in China alone. (The Atlantic)
A clarifying moment: COVID-19 has revealed cracks in Southeast Asia’s widely touted growth models. Many countries in the region have leaned too heavily on external demand from their larger neighbour, and on China-centric supply chains. (Carnegie Endowment for International Peace)
Compared with the SARS era, China’s economy now relies to a much larger extent on consumption and services. According to one government economist, that means the domestic economic impact of COVID-19 could be significantly bigger. (The Diplomat)
One bright spot for everyone sharing a planet with China: lowered electricity demand and industrial output in the world’s second-largest economy related to COVID-19 reduced its typical carbon emissions during the first half of February by one-quarter. (Carbon Brief)
Historical precedents, like the Genovese merchants who brought the Black Death home to Europe from Asia, suggest the spread of COVID-19 should halt trade with China. But in reality, boosting trade with the country may help both China as well as other economies better cope with its impact. (Wharton)

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What is the World Economic Forum doing about epidemics?

Epidemics are a huge threat to health and the economy: the vast spread of disease can literally destroy societies.

In 2017, at our Annual Meeting, the Coalition for Epidemic Preparedness Innovations (CEPI) was launched – bringing together experts from government, business, health, academia and civil society to accelerate the development of vaccines against emerging infectious diseases and to enable access to them during outbreaks.

Our world needs stronger, unified responses to major health threats. By creating alliances and coalitions like CEPI, which involve expertise, funding and other support, we are able to collectively address the most pressing global health challenges.

Is your organisation interested in working with the World Economic Forum to tackle global health issues? Find out more here.

On the Strategic Intelligence platform, you can find feeds of expert analysis related to Global Health, Global Trade and hundreds of additional topics. You’ll need to register to view.

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