The economic toll of the coronavirus – from iPhones to solar panels to tourism
The novel coronavirus COVID-19 is having a long economic reach, in China and beyond. Image: REUTERS/Tingshu Wang
- 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.
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.
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.
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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