It is never a good thing for anyone when an illness affects business.

However, it can be catastrophic, disruptive, chaotic & can cost companies considerable revenue when it is a global issue.

It is no secret that the current spread of the Coronovirus is causing havoc in China, with tens of thousands having been already affected & sadly several hundred already succumbed to the respiratory virus.

However, the greater impact on businesses is now beginning to be felt. With companies throughout China being suspended & the Lunar New Year holidays in some Provinces being extended to try & control the spread of the virus, the ripple effect is beginning to felt further afield.

China is one of the largest exporters in the world & millions of companies & consumers globally rely on their ability to produce vast quantities of products at relatively reduced costs in comparison to other markets.

However, with the risks from the Coronavirus being felt internationally, how are businesses coping in the face of shortages of products & more importantly, with work forces potentially being quarantined?

China itself has already begun to see the impact of how the Coronavirus is affecting their economy. Home sales have already been affected, with a noticeable plummet in the first week of February. Data gathered from 36 major cities saw new apartment sales drop 90% from the same period of 2019 & sales of existing homes plummet by 91% (1)

The further reaching impact of how the Coronavirus is affecting industry, is being felt globally. Here are just a few examples of how other businesses are being affected.

Nissan shut down –

Nissan joined other car giants Hyundai in temporarily having to close one of it’s factories this week, due to a shortage of components & parts from China. As China’s manufacturing sector remains locked down to prevent the spread of the Coronavirus, the economic impact being felt by factory shut-downs in other countries, cannot be ignored.

The impact has not just been felt in Asia, but even Fiat Chrysler announced last week that were considering halting one of their production lines, due to a shortage of parts from China.

”It only takes one missing part to stop a line,” said Mike Dunne, a consultant to the car industry in Asia. (2)

Cruise ship quarantine –

The cruise liner Diamond Princess has been quarantined in Yokohama Harbour, Japan, as an outbreak of the Coronavirus was announced. With more than 3000 guests on the cruise liner & some 135 having already been infected, the task to contain the virus on board is a challenge.

However, despite the outbreak being an awful thing for anyone on board & those infected to have to deal with, there is a question which from an economic perspective hasn’t thus far been addressed that being; what is the economic impact of the cruise liner being held in Yokahama & who foots the bill?

The ripple effect of the 3000 guests being quarantined on board of course not only impacts them, but also has a huge impact on Princess Cruises as well. The bigger question is, who is paying for the 3000 guests quarantined on board? (3)

With this in mind, what is the logistical impact of the Diamond Princess being kept in Yokahama & how will all of the other cruises booked to the diamond Princess be affected? A high proportion of guests aboard the Diamond Princess will have jobs they cannot return to, with a further economic impact on the businesses they work for. So, the question remains; who foots the bill?

Despite this snapshot of some of the economic impact from the outbreak of the Coronavirus; China has announced its contingency to support its own economy.

On 2^nd February 2020, China announced it would pump $173 billion into the economy, to try & create some balance for the economic impact the Coronavirus is having on the country. Furthermore, in order to minimize job losses, China are likely to sign-off on more spending, tax relief & subsidies for virus-hit sectors, alongside further monetary easing to spur bank lending and lower borrowing costs for businesses, according to the policy insiders. (4)

Therefore, despite the human costs already having a huge impact globally, we need to be mindful of the economic impact the Coronavirus can & is having on global manufacturing & global markets.

Written by Katy-Jane for & on behalf of Virtually Smart Ltd.