TOKYO (AP) — A deepening health crisis became an economic one too Friday as the coronavirus outbreak sapped financial markets, emptied shops and businesses and put major sites and events off limits.
The list of countries hit by the illness edged toward 60 as Mexico, Belarus, Lithuania, New Zealand, Nigeria, Azerbaijan, Iceland and the Netherlands reported their first cases. The threats to livelihoods were increasingly as worrisome as the threats to lives.
“It’s not cholera or the black plague,” said Simone Venturini, the city councilor for economic development in Venice, Italy, where tourism already hurt by historic flooding last year has sunk with news of virus cases. “The damage that worries us even more is the damage to the economy.”
The head of the World Health Organization said Friday that the risk of the virus spreading worldwide was “very high,” citing the “continued increase in the number of cases and the number of affected countries.”
Economists have forecast global growth will slip to 2.4% this year, the slowest since the Great Recession in 2009, and down from earlier expectations closer to 3%. For the United States, estimates are falling to as low as 1.7% growth this year, down from 2.3% in 2019.
But if the disease known as COVID-19 becomes a global pandemic, economists expect the impact could be much worse, with the U.S. and other global economies falling into recession.
“If we start to see more cases in the United States, if we start to see people not traveling domestically, if we start to see people stay home from work and from stores, then I think the hit is going to get substantially worse,” said Gus Faucher, an economist at PNC Financial.
Part of the problem is that the health measures needed to combat the outbreak — locking down cities and ordering workers and students to stay home — damage the economy.
“This is a case where in economic terms the cure is almost worse than the disease,’’ said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics. “When you quarantine cities … you lose economic activity that you’re not going to get back.’’
Kirkegaard said that hard-hit Japan, South Korea and Italy could slip into recession. And if the U.S. stock market continues to plunge, American consumers could lose confidence and cut their spending, threatening to turn the record-breaking 11-year U.S. economic expansion into a recession.
“You don’t need many more days like this,’’ he said, as stocks tumbled again on Wall Street.
In Asia, attractions including Tokyo Disneyland and Universal Studios Japan announced closures, and events that were expected to attract tens of thousands of people, including a concert series by the K-pop group BTS, were called off.
Investors watched as stocks fell across Asia. On Wall Street, the Dow Jones index suffered another brutal drop, falling 715 points in mid-day trading. The index has dropped more than 13% since last week.
Businesses large and small saw weakness, and people felt it in their wallets.
“There’s almost no one coming here,” said Kim Yun-ok, who sells doughnuts and seaweed rolls at Seoul’s Gwangjang Market, where crowds were thin Friday as South Korea counted 571 new cases — more than in China, where the virus emerged. “I am just hoping that the outbreak will come under control soon.”