It is too early to tell the economic toll from the COVID-19 outbreak in China, but the hit to global growth should be “mild,” IMF managing director Kristalina Georgieva said on Wednesday.
The IMF is expecting a “V-shaped impact,” with a sharp decline in activity in China followed by a sharp recovery, meaning there likely would only be a “mild impact on the rest of the world,” Georgieva said on CNBC.
However, she added: “It is still too early to make projections,” and the global economy is “somewhat less strong” than it was when China faced the SARS virus epidemic in 2002 to 2003.
“China was different, the world was different. This virus is clearly more impactful and the world economy then was very strong,” she said.
The IMF projects China’s economy to grow 6 percent this year, compared with 10 percent in 2003.
US officials likewise are reluctant to provide forecasts, but said the impact on the US economy probably would be short-lived.
“There’s no question it’s having a significant impact in China,” US Secretary of the Treasury Steven Mnuchin told legislators on Wednesday.
However, for the US economy, he said: “I don’t expect that the coronavirus will have an impact beyond this year.”
He echoed comments from US Federal Reserve Chairman Jerome Powell, saying: “We’re obviously monitoring very carefully.”
In two days of testimony to US Congress, the Fed chief was upbeat about the economy, which is experiencing a record 11th year of growth, confirming there is little interest in raising interest rates.
Powell said the Fed is keeping close tabs on the COVID-19 outbreak that has killed hundreds and sickened tens of thousands of people since last month, nearly all in China.
“We do expect that there will be some effects” on the US economy, Powell said, adding that he expects to begin seeing these reflected in economic data “relatively soon.”
Factory shutdowns and travel restrictions aimed at containing the virus’ spread within China and to the rest of the world are expected to disrupt supply chains.
US exports to China would also be suppressed, he said, as would Chinese tourism to the US.
Financial markets offer another pathway for impact on US growth, he said.
Additional reporting by Reuters
TV and online retailer Momo.com Inc (富邦媒體) yesterday said it has set up a new logistics subsidiary, Fu Sheng Logistics Co (富昇物流), to oversee the company’s extensive shipping operations. Leveraging Momo’s 23 satellite warehouses and distribution centers nationwide, Fu Sheng will be in charge of executing the retailer’s same-day shipment plan for deliveries in Taipei, New Taipei City, Taoyuan, Taichung, Tainan and Kaohsiung, Momo said in a press release. Seeking to further shorten its supply chain, the company is to set up another seven satellite warehouses and distribution centers by the end of the year. “Fu Sheng has a fleet of 200 couriers
‘ACCORDING TO PLAN’: A company official said that it has set up production sites worldwide to provide services and that its Wisconsin project was going smoothly Hon Hai Precision Industry Co’s (鴻海精密) smart manufacturing center in Wisconsin would begin trial manufacturing in the middle of this year, the company said yesterday, adding that it plans to build a research institute to develop key technologies to support growth over the next five years. Hon Hai, known internationally as Foxconn Technology Group (富士康科技集團), said in an annual report submitted to the Taiwan Stock Exchange that its planned Foxconn Institute for Research in Science and Technology would conduct research into artificial intelligence, next-generation communications, quantum computing, cybersecurity and nano semiconductors in Taiwan. Hon Hai is to make products at the center
US-CHINA TENSIONS: The company said that it supplies self-designed chips to the Chinese company and, as such, is not affected by the latest US export restrictions Macronix International Co (旺宏電子) said it does not expect its shipments of memory chips to Huawei Technologies Co (華為) to be affected by the latest US export restrictions on the Chinese tech giant. “As long as the company [Huawei] places orders, we will ship [chips], unless the [Taiwanese] government restricts all Taiwanese companies from shipping” to Huawei, Macronix chairman and chief executive officer Miin Wu (吳敏求) said on Monday in Hsinchu. The US Department of Commerce on Friday took a further step to block chip supplies from non-US companies to Huawei by requiring foreign semiconductor makers to get US government permission before
E Ink Holdings Inc (元太科技), the world’s sole supplier of e-paper displays for e-readers and shelf labels, posted its best quarterly net profit for the first quarter in nine years amid increased demand during a traditionally slow season. Net profit soared 80 percent to NT$787 million (US$26.23 million) in the quarter ended March 31, compared with NT$438 million a year earlier. That translated into earnings per share of NT$0.69, up from NT$0.39. E Ink posted lower royalty income of NT$371.23 million last quarter from NT$448.74 million a year earlier, a company financial statement showed. E Ink said that it expects royalty income to