by Gabby G.
The coronavirus, known officially as COVID-19, has unleashed a common symptom of fear across the globe.
This fear has caused a massive hiccup in the global economy, causing the Dow to drop over 1,000 points, a significant 3.6% drop.
The reason for this is the demand for Chinese goods and services dramatically dropping—and global businesses with ties to China are also significantly suffering. South Korea, a supplier of most cars, electronics, and other machinery, has over 890 cases confirmed of the virus, resulting in a 3.9% drop in stock shares.
Fear has grown exponentially in Italy, one of the fashion capitals of the world. Not only are there over 270 confirmed cases, there have been 7 confirmed deaths. Because of the mass panic, Italian government officials have shut down public buildings, schools, and cancelled sports events. Italian stocks have suffered a huge 5% drop.
Japan, another huge economy that represents at least 27% of global gross domestic product, has hundreds of infections confirmed. “When the virus was limited to China and other nearby countries, it was viewed as an economic issue for Asia,” said Kevin Giddis, a chief fixed income strategist at investment banking firm Raymond James.
“The spread of the virus into Italy now makes this a European issue and possibly a global issue that could upset the supply chain for months or years to come.”
Major American orchestras have cancelled any tours in China due to the rising panic of the virus. Tourism has also taken a massive hit, with Chinese travelers forced to stay home as the virus continues to spread. Passenger traveling has also been curtailed.
This is also due to the massive PR nightmare regarding the Diamond Princess cruise ship, which quarantined more than 1,200 passengers in Yokohama. “This has many economic implications,” said Wharton management professor Mauro Guillen.
“It has implications not just for China but for the entire world. The world depends on Chinese growth.” He cited the country’s supply-chain role and consumer buying power in regards to the potential crisis. Still, Guillen says, “It is unclear how much impact in the end this is going to have.”
So far, what is known at this point about the coronavirus is its nucleic acid sequence, “…[and] that gives scientists a lot of information,” says Harvey Rubin, a Penn professor of medicine and infectious disease specialist.
“[However] what that doesn’t tell you is how transmissible it is. It doesn’t tell you whether the disease can be spread when it’s asymptomatic. We don’t yet know how transmissible it is person to person. Right now, 99% of cases are still in China, but a small but important number are out of China, so the trajectory of this problem is still a time-dependent process…we are still learning, and the numbers are still coming in.”
Currently, Moderna Therapeutics, a biotech company located in Cambridge, Massachusetts, has shipped the first batches of the COVID-19 vaccine.
With any luck, human trials for the vaccine begin hopefully in April.