Economic fallout from coronavirus likely to be worse than SARS, expert cautions
The Trump administration is working to secure U.S. supply chains
White House Director of Trade and Manufacturing Policy Peter Navarro discusses the impact of coronavirus on the American economy and the steps being taken to fight the spread of the disease as well as maintaining Chinese supply chains.
Amid fears that the spreading coronavirus could jolt the global economy as more countries report new cases, one expert is cautioning that disruptions to the supply chain are likely to be worse than what was experienced during the SARS outbreak.
Panos Kouvelis, director of the Boeing Center for Supply Chain Innovation at the Olin Business School at Washington University in St. Louis, noted that it’s hard to predict the magnitude of what the consequences will be because of increased global reliance on China throughout the global economy.
“I want to be optimistic, but China means a lot for a lot of companies,” Kouvelis said. “So if China really gets hurt, it will slow down the global economy in terms of its growth. We’re doing about 2 percent growth. Two percent can easily go away. If the epidemic lasts six, eight months, the global economy could face a recession state.”
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Kouvelis noted that due to the heightened reliance on, and economic ties to, China — as a manufacturing hub and a market — fallout could be far greater than it was in 2002, when SARS broke out. Like the coronavirus, SARS originated in China.
In an interview with FOX Business’ Charles Payne on Monday, White House trade adviser Peter Navarro told FOX Business that the administration is looking to boost domestic production in order to bring parts of the supply chain back to the United States.
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Kouvelis said that the trade war between the U.S. and China may have actually prepared the U.S. to better handle the coronavirus fallout. That’s because the administration had already been working on diversifying its supply chain to rely less on China.
Stocks were trading lower on Monday as South Korea, Iran and Italy reported new confirmed cases of the virus. There are 53 confirmed cases of the coronavirus in the U.S.