Increasing volatility in global stock markets has been another unfortunate side effect of the ongoing epidemic, with investors struggling to interpret the data emerging from China.
A Reuters poll of economists suggests that China’s economic growth could slow to 4.5% in Q1 2020 – its slowest pace since the financial crisis. The resulting economic fallout could have much more far-reaching consequences, with China’s status as the world’s second-largest economy and leading trading nation.
Economic indicators such as the return rate of workers, traffic flows, and electricity usage, among others, are being closely monitored to evaluate how the Chinese economy is faring during this public health emergency. While certain indicators have improved slightly, the picture remains bleak in the Hubei province, which accounts for around 4% of China’s GDP. In a similar vein, the International Energy Agency has predicted the first drop in global oil demand in a decade, thanks to the virus’ impact on manufacturing and travel.
In case your company is heavily invested in China, it is advisable to monitor the situation closely, and consider tweaking your portfolio, should these economic fundamentals continue to deteriorate.
Further effects of this global pandemic continue to be observed in consumer demand, global travel, and crisis management measures taken by both companies and governments. While it is important to evaluate its potential impact on your business and supply chain, it is even more imperative to remember not to panic, and to consider the longer-term consequences of any major organizational changes that you are considering.