Coronavirus: Real Effects, Predictions Without Basis

The epidemic that adds more than 1000 deaths already has concrete impacts in several areas of the global economy:

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1.- Suspension of production in China of inputs for different industries.

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2.- Lack of maritime and land transportation (there are not enough drivers) to send the merchandise to export destinations.

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3.- Fall in prices of raw materials, mainly oil, which has already pierced the floor of 50 dpb. China is the main importer of commodities.

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4.- Suspension of flights and cancellation of events in different parts of the world. Sony, Amazon, Ericsson have canceled their attendance at the Mobile World Congress in Barcelona this month so as not to put their employees at risk. They will carry out their presentations through the web.

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5.- Possible relocation of supply chains in the medium term, to bring production closer to consumption centers, in order to reduce times and risks.

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6.- Mexico imported goods for 83 billion dollars from China in 2019, which reveals its dependence on inputs from the Asian giant.

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7.- Predictions: The rating agency S&P Global Ratings reduces the expected growth for China in 2020 from 5.7 to 5%. It expects the epidemic to be under control in March. However, it warns that if the epidemic is not controlled, the economic impact could be exponential with significant effects on credit.

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For its part, Moody's Analytics considers that an eventual coronavirus pandemic would be a "black swan" (unexpected event) greater than the financial crisis of 2008, because unlike the great recession, no one foresaw the arrival of a health crisis like the coronavirus.

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On the other hand, Federal Reserve officials consider that the coronavirus is not yet a sufficient risk factor to lower interest rates.

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The future remains unpredictable.