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The International Monetary Fund (IMF) said Thursday that it has been closely following the developments on the novel coronavirus outbreak, and it's "too early to quantify" in any precise way the economic impact.
"The economic impact will depend very much on the behavior of the illness itself, the virus. How fast it spreads, who it affects and how quickly the contagion will run its course," Gerry Rice, director of IMF's communications department, said in a press briefing.
"We've seen the direct impact mostly on demand as people have stayed home in China. And usually what is usually a very busy retail and tourism season has essentially come to a halt," said Rice.
On the supply side, there have been production stoppages, transport delays and frictions and workers staying home, he said, adding that the outbreak could also have "indirect effects" through confidence and uncertainty.
The IMF spokesperson, however, noted that the multilateral lender also expects that much of these effects could be "temporary" and "be reversed" once the virus retreats.
"As roads and airports open up again, people go back to work, and firms make up for lost business," he said.
The overall impact on the Chinese economy will depend on how long it will take before we get to that point of reversal, Rice told reporters. "If the virus retreats quickly, the impact will likely be small."
He looked back on the 2003 SARS outbreak and said most experts agree that annual growth took "a relatively small hit" at that time because it was reversed.
In terms of the coronavirus outbreak's global impact, Rice said "we are looking mostly at a reduction in the number of Chinese people traveling aboard, the slowdown in imports along with domestic economic activity," adding that Asia would like be most affected, given China's close ties with the region.
The IMF spokesperson also said Chinese authorities are clearly "taking this very seriously," noting that China is "a large economy with the resources and the resolve to effectively meet this challenge."
Rice said the "right priority" is getting help to the people who have been affected, including increased spending on public health services and prevention to help address and contain the outbreak. "That's what the authorities are doing is my understanding," he said, adding that "China has the fiscal space to act if needed."
Rice also noted that the IMF thinks "it's very helpful" that the Chinese authorities are "working closely" with the World Health Organization and others including "by sharing information about the disease and the measures taken.
(ASIA PACIFIC DAILY)
