Coronavirus outbreak in China: Risks of supply chain disruption increase with time
- The official PMIs for January released today do not yet reflect the magnitude of the economic concerns around the ongoing coronavirus 2019-nCoV outbreak in China. However, Euler Hermes thinks that its impact on the Chinese economy and the rest of the world is not negligible.
- The hit to China’s GDP y/y growth could amount to c. 1pp, mostly over Q1 2020. A recovery should thereafter be possible, based on pent-up production and policy support.
- A protracted pause in Chinese activity could be disruptive for certain supply chains such as chemicals, transport equiment, textile and electronics.
- The top five economies potentially hit by this disruption are Taiwan, South Korea, the Netherlands, Hungary and Indonesia.
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