China is the world’s second-largest economy and leading trading nation, therefore economic fallout from coronavirus threatens global growth, according to this statement from Banque SYZ.
Economists expect China’s economic growth to slump to 4.5% in the first quarter of 2020, down from 6% in the previous quarter – the slowest pace since the financial crisis.
Renewed fears that the coronavirus will harm global growth rocked commodity markets, with oil and metals prices tumbling while gold soared amid a global flight to haven assets. As the deadly virus spreads more widely outside China, raising the threat of a global pandemic, finance chiefs and central bankers from the world’s largest economies said they see downside risks to the world economy persisting.
That’s spurring fresh alarm in commodity markets that had started to recover from lows hit earlier in the month when China’s virtual shutdown threw supply chains into chaos. With the International Monetary Fund cutting its global growth forecast and warning that it’s also looking at more “dire” scenarios, investors are concerned that risks to raw material demand are worsening.
High uncertainties surrounding the coronavirus is feeding volatilities, carrying investors toward a safe haven play and that’s gold. For South Africa, a rise in the gold price has an important impact on employment levels, the value of the SARB reserve assets, the value of the export component on the balance of payments, and the value of the rand.
Oil led the losses in Asia, plummeted more than 3% in London and New York. Until Friday 21 February, Brent crude had been in the longest run of gains in more than a year thanks to Chinese fiscal stimulus and new threats to supplies from Africa and Latin America. Industrial commodities were also hit hard, with copper sliding about 1% on the London Metal Exchange and rubber tumbling more than 2% in Singapore.
Agricultural commodities weren’t spared, with US wheat leading losses. The declines reflect a broader market sell-off as the spread of coronavirus cases outside China spooks investors. US and European equity futures tumbled with Asian shares from Seoul to Sydney, while the Australian dollar retreated along with the offshore yuan.
South Korea, the hardest-hit country after China, had earlier raised its infectious-disease alert to the highest level after a 20-fold increase in cases. The situation in Europe was also escalating and extreme care is being taken where Austria halted a train from Italy due to concerns that there were two infected passengers on board. Italy, now the virus’s epicentre on the continent, cancelled the Venice Carnival and other events amid a rising case load.
The coronavirus is impacting global supply chains from watches to lobsters and as they flee riskier assets, investors are searching for safety, sending gold prices to fresh seven-year highs, with bonds also advancing. Bullion prices have taken off this year, rising almost 10%, as concerns over the virus deepened and speculation mounted that the US Federal.