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Well, the coronavirus emanating from China hit global growth. Could it tip the world into a global recession? It's an interesting question. And it's something analysts have been comparing to the Sars virus that hit in 2003.
But the truth is that the world is much different now than it was then. Back then China was still emerging into the global economy. But over the last few years China has made up the biggest percentage of global growth, about a third of total economic growth in the world, which is a higher percentage than the US, Europe, and Japan combined. So what happens in China matters more.
That's both a consumer story and a business story. If you look at outbound Chinese tourism, it's a big part of the global tourism story. In the US alone, before the US-China trade war started slowing things, the Chinese were coming as tourists to the US and spending around $7,000 to $8,000 over the course of two weeks. That's a much richer impact for tourism than your average tourist. European countries, and particularly Asian countries, are now being hit as Chinese consumers pull back because of the quarantine.
But coronavirus isn't just a consumer story. It's a business story. The Wuhan area, Hubei Province, is a huge area for supply chains and logistics, which are already being downgraded off the back of this virus. If there's enough supply chain disruption, China may not be able to meet its new commitments for US purchasing as part of the US-China trade agreement. That would have geopolitical implications, which could further hit growth. Bottom line: look for coronavirus to be a big part of the global economic story this year.