A 2019 novel coronavirus (2019-nCoV) outbreak might drag China’s GDP growth this quarter, which would be unfavorable to Taiwan, Australia and New Zealand Banking Group Ltd (ANZ) said yesterday.
The 2019-nCoV outbreak and its aftermath would likely subdue China’s economy by 0.9 percentage points this quarter, resulting in GDP growth of 5 percent, ANZ said in a report.
Industrial activity and exports were already expected to lose momentum due to the Lunar New Year holiday and now supply chain activities have been interrupted since Wuhan, the epicenter of the outbreak, is a large industrial hub in China, it said.
“We find Taiwan and Vietnam are most exposed in terms of the potential impact on growth via the trade channel,” the report said.
The magnitude and duration of the economic effects, as well as financial market developments, would be determined by how quickly Beijing can contain the outbreak, it said.
Taiwan’s exports could squeeze a 1 percent pickup for last month, slowing from a 4 percent increase in December, because of fewer working days, it added.
The projection was more optimistic than the Ministry of Finance’s estimate that exports could slip back into contraction, with a retreat of between 4.5 percent and 6.5 percent amid holiday disruptions.
Tens of thousands of Taiwanese firms have extended the Lunar New Year holiday for their operations in China to help authorities battle the outbreak.
A disruption in China’s industrial activity would reduce its import demand across the region, at least temporarily, ANZ said.
About 40 percent of Taiwanese exports are destined for China, although some firms have sought to diversify their clientele in the past several years, official data showed.
The Ministry of Finance is expected to update export figures on Friday next week.
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