The transmission of the 2019 Novel Coronavirus (n-CoV) continues to escalate, prompting the Chinese authorities to take extreme measures to prevent the virus from spreading. For example, they locked down 18 cities in Hubei province by closing off access to the cities and transportation in the province. Moreover, group tours and travel packages organized by both domestic and international travel agents are suspended. Chinese authorities also shut down tourist sites in other cities, which would otherwise be bustling, such as the Great Wall of China and Shanghai Disney Resort, and extended the Lunar New Year holiday for another three days from the original end of January 30, 2020 in order to keep citizens home to control the spread of the coronavirus.
The outbreak has struck during the Chinese New Year festival, which is one of the busiest travelling and spending seasons. Based on KResearch primary estimates, the outbreak within the one-month period could threaten the Chinese economy to the tune of at least 300 billion Yuan or 0.3 percent of the country's annual gross domestic product (GDP). Therefore, Chinese economic growth in 2020 may slip below the original forecasts of 5.5-5.9 percent because the direct impacts would be felt by retail, transport and other service sectors involved with consumption and tourism.
Looking ahead, the outbreak of the coronavirus with infected patients found in China and other countries must be closely monitored. If the contagious virus cannot be contained, it would pose further downside risks to the Chinese economy. Moreover, close attention must be paid to the economic stimulus measures to be introduced by Beijing after the end of the outbreak to offset the economic losses, which remain uncertain. At the same time, the Chinese authorities have limited fiscal policy space to reboot the economy. KResearch will continue to assess the situation periodically and revise the economic indicators again whenever there is any development in terms of severity, scope and protraction of the coronavirus outbreak in the future.