{"id":50837,"date":"2020-01-30T16:18:54","date_gmt":"2020-01-30T21:18:54","guid":{"rendered":"https:\/\/olduvai.ca\/?p=50837"},"modified":"2020-01-30T16:18:56","modified_gmt":"2020-01-30T21:18:56","slug":"coronavirus-and-the-world-economy","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=50837","title":{"rendered":"Coronavirus and the world economy"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/gnseconomics.com\/en_US\/2020\/01\/30\/coronavirus-and-the-world-economy\/\">Coronavirus and the world economy<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">The outbreak of the coronavirus epidemic in China has shaken the global asset markets\u2014and with good reason. The coronavirus has the potential of being the \u2018trigger\u2019 which will push the world into a global depression.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Here, we briefly explain why.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>The outbreak<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">It looks that the virus spreads&nbsp;<a href=\"https:\/\/www.marketwatch.com\/story\/how-the-mysterious-coronavirus-from-china-has-spread-so-quickly-2020-01-21\" target=\"_blank\" rel=\"noreferrer noopener\">very easily<\/a>, through droplet infection and with a \u201clatency\u201d period that allows infected people to spread the virus before they themselves exhibit symptoms. This implies that the virus has already spread much more widely &nbsp;than original estimates indicate. The individual cases popping up across the globe are one confirmation of this.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Fortunately, the fatality rate is still relatively low:&nbsp; under 2 percent. However, this can change, especially if the virus mutates, and there\u2019s already&nbsp;<a href=\"https:\/\/twitter.com\/WilliamYang120\/status\/1222611937155932160\" target=\"_blank\" rel=\"noreferrer noopener\">speculation<\/a>, whether the figures provided by China can be trusted.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>China in trouble<\/strong><\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As we have been warning through 2019 (see, e.g.,&nbsp;<a href=\"https:\/\/gnseconomics.com\/en_US\/2019\/08\/08\/where-from-here\/\">this<\/a>&nbsp;and&nbsp;<a href=\"https:\/\/gnseconomics.com\/en_US\/2020\/01\/10\/the-end-of-the-chinese-miracle\/\">this<\/a>), China\u2019s economy is ripe for a serious downturn. Beijing used most of its remaining firepower last year, when it desperately tried to postpone the inevitable recession, probably to appear strong in the trade negotiations.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Despite record-breaking stimulus enacted in 2019, the Chinese economy has grown at a sub-par rate of around six percent. And this is according to the official statistics! &nbsp;In reality, the actual Chinese growth rate has probably been much lower.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As China\u2019s State-Owned Enterprises, or \u201cSOEs\u201d, have become riddled with debt, their ability to increase production has stagnated. This has also contributed to the broader stagnation of productivity growth in China (see Figure 1). After the growth of SOEs faltered in 2017, the Chinese consumer has become an important driver of the economy.<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/gnseconomics.com\/wp-content\/uploads\/2019\/09\/China-TFP-BLOG.jpg\" alt=\"\" class=\"wp-image-3849\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Coronavirus and the world economy The outbreak of the coronavirus epidemic in China has shaken the global asset markets\u2014and with good reason. The coronavirus has the potential of being the \u2018trigger\u2019 which will push the world into a global depression. Here, we briefly explain why. The outbreak It looks that the virus spreads&nbsp;very easily, through [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2,4],"tags":[130,2310,19965,7258,28849],"class_list":["post-50837","post","type-post","status-publish","format-standard","hentry","category-economics","category-environment","tag-china","tag-depression","tag-gns-economics","tag-viral-outbreak","tag-wuhan-virus"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50837","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=50837"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50837\/revisions"}],"predecessor-version":[{"id":50838,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/50837\/revisions\/50838"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=50837"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=50837"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=50837"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}