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Global impact
Health officials in Hubei province, the epicentre of the coronavirus (COVID-19), reported on 13 February night that nearly 15,000 new infections and 242 deaths had been recorded during the day after new computerised tomography (CT) scanning devices were used to diagnose infection cases in addition to the standard nucleic acid tests.
Chinese officials said 13,332 of the new cases and just over 50 per cent of the deaths were diagnosed using the new diagnostic equipment . This brings the recorded number of cases of the virus worldwide to more than 60,000, all but around 525 in China, with at least 1,360 deaths, all but two in China.
The change in diagnostic techniques is growing uncertainty over the size and severity of the outbreak, with many epidemiologists and other public health specialists offering contradictory assessments over the global trajectory, duration and impact of the virus. Before the outcome of the new testing techniques was announced, Chinese officials had reported the number of confirmed new cases inside the country had declined for two consecutive days.
In addition, the UK government on 10 February declared the coronavirus outbreak a ‘serious and imminent threat to public health’ and announced stricter measures to contain the spread of the virus, including longer quarantine periods.
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What is coronavirus?
Coronavirus is a pathogen that causes respiratory illness. The virus was first detected in the Chinese city of Wuhan, Hubei province, in December 2019. The vast majority of cases have been reported in China, notably in Hubei province, although the virus has also been detected in more than 20 other countries, and this number is likely to increase in the coming week. Physical severity can range from mild illness to pneumonia, and around one in five cases are thought to be severe. The mortality rate for coronavirus to date is recorded at around 2 per cent.
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The most common symptoms of COVID-19 are fever, cough, sore throat, fatigue and shortness of breath. Epidemiologists note that human-to-human transmission generally occurs between people in close proximity (less than 2m), and is believed to spread primarily via respiratory droplets dispersed through coughing or sneezing.
The incubation period – the time between exposure to the virus and the onset of symptoms – is thought to be between two and 14 days. Others estimate a median period of three days, with the period ranging between zero and 24 days. There is no specific antiviral treatment available for coronavirus. People with the virus receive supportive care to relieve symptoms, while treatment for severe cases includes care to support vital organ functions. |
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Supply chains
- Pharmacies across the world are running increasingly short on supplies of face masks and hand sanitizers, with some businesses in Canada, the US and UK running out of the goods entirely. This is likely, at least in part, due to China-based parallel traders purchasing such goods from outside of China and selling them in China. On 6 February, Kazakhstan announced a ban on the sales of protective masks to China due to surging domestic demand for masks.
- China’s efforts to resume economic activity after the extended Lunar New Year holiday have been challenged by a combination of more health regulations imposed in the public and private sectors, disrupted transport networks and the reluctance or inability of employees to return to work.
- Following accusations that local officials ignored or suppressed information at the start of the viral outbreak, many health and administrative officials appear unwilling to give permission for industrial or other enterprises to restart unless they complete highly detailed, time-consuming and often contradictory measures. Corporate management are pressured to restart production while instructed to limit the spread of the virus.
- On 11 February, the UK government’s health department wrote to pharmaceutical companies and medical device manufacturers to review their supply chains in light of the outbreak. Companies dependent on products from China were advised to seek alternative suppliers.
- Postal services, including the US Postal Service, France’s La Poste, and Postnord which handles postal services across Scandinavia, announced the suspension of deliveries to mainland China, Hong Kong and Macau on 11 February. The suspensions are mainly due to the large number of flight cancellations, which has reduced their ability to send mail. The suspensions are likely to also affect air freight from China.
- Similar moves are likely to be imposed on maritime shipping if the outbreaks continue to spread outside of China in the one-week outlook. This would have a serious impact on China-based e-commerce, which holds a large market share in Europe and elsewhere.
- European automakers whose supply chains are highly exposed to the Chinese market, such as Fiat-Chrysler and Volvo Cars, are facing shortages of supplies from China which has disrupted their Europe-based operations. Japanese carmakers Nissan Motors and Toyota Motor Corporation have also announced temporary stoppages to their respective operations at its plants in China.
- On 13 February, US aerospace manufacturer Boeing sounded the alarm over a likely significant economic impact on aviation in particular, and the supply chains it services.
We further assess the impact on Commercial Aviation, Shipping, Overland Mobility, Goods-Manufacturing, Agriculture, Energy and the Service sectors in the full report.
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Impact on foreign investment
Many foreign companies have already cut the number of expatriate staff and dependents as China’s economy slows and factories and other business operations close down. On 11 February, the US Department of State authorised non-essential staff and family members at the US consulate in Hong Kong to leave the territory if they wished due to what it termed ‘uncertainties’ over the coronavirus outbreak.
As China is among the three largest investors in Sub-Saharan Africa, and in particular East and Southern Africa, regional supply chains remain very exposed to shipments from mainland China. Controls at the sub-region’s largest ports, including Durban, Djibouti, Mombasa, Lagos and Abidjan have therefore been intensified, including inspections of goods and crew aboard cargo vessels. However, it is doubtful that controls at medium- and smaller-sized ports will be as robust as the large commercial ones. Furthermore, the presence of a sizeable Chinese fishing fleet in waters off both the Atlantic and Indian Ocean littorals of Africa, could further multiply the potential transmission vectors in highly vulnerable environments with poor resilience to cope with an outbreak on par with those ongoing in China. We provide more analysis and insights on the impact on Foreign Investment and Bilateral Relations in the full report.
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Uncertainty about the spread of the disease, due to contradictory statements from different authorities will continue to cause concern across the world. Stabilisation in new infection cases, however, suggests the outbreak could have reached its peak, but marked growth of new cases after rolling out the use of new screening techniques suggest the outbreaks could be far greater than initially assessed.
Travel
At least 50 airlines have suspended or reduced services to and from China and Hong Kong, while restrictions at land and sea borders are likely to remain in force until the spread of the virus lessens through natural means or government intervention. Further such restrictions, or extensions to recently imposed travel bans or flight suspensions, are highly likely in the one-week outlook.
Sectoral
With global supply chains severely disrupted, and China struggling to relaunch economic activity this week, many industries and sectors will continue to reel from fast-dwindling demand globally. This primarily stems from China’s dominance of global trade, with its top-10 accounting for about 67 per cent of global shipping.
Companies selling electronic goods and machinery, which accounts for about 26 per cent of China’s exports, by value, will likely continue to experience disruption to deliveries. Foxconn is unlikely to resume full operations in China by the end of the month. In the longer term, electronic goods manufacturers such as Apple, could be forced to delay the roll-out of new products. The next iPhone SE 2 is due to be launched in March, and the iPhone 12 is due to be launched in September. That flagship industry events, such as the MWC, are seeing more cancellations due to corporates imposing travel bans will further compound this risk over the next two quarters.
The full report contains outlooks for Civil Unrest, Health, Travel, Macro-Economic and Sectoral situations for the next 7-day monitoring cycle and beyond.
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