Budapest Post

Cum Deo pro Patria et Libertate
Budapest, Europe and world news

Dr. Doom warns coronavirus will shock Chinese economy

Dr. Doom warns coronavirus will shock Chinese economy

Nouriel Roubini warns the coronavirus outbreak will have a big impact on the global economy.
The economist nicknamed Dr. Doom for his dire, but accurate, predictions says the coronavirus outbreak will rock the Chinese economy and send shockwaves to the U.S. and rest of the world.

The disease, which originated in Wuhan, China, has led to the lockdown of more than 60 million people and caused scores of companies to temporarily shutter or reduce operations in the country, bringing the world’s second-largest economy to a grinding halt.

“The economic damage done to China implies that China cannot grow more than 4 percent this year," Nouriel Roubini, CEO at Roubini Macro Associates, said on “WSJ at Large” with Gerry Baker. "The transmission through trade and other channels is going to be seen across the world.”

At a 4 percent growth rate, the Chinese economy would be operating far below its potential. Even amid the challenges of a U.S. trade war that made Chinese goods far more expensive, the economy grew at a 6.1 percent pace in 2019. That was its slowest rate of expansion since record-keeping began in 1990.

Shrinking from 6 percent to 4 percent, however, means China's growth is reduced by a third, Roubini said.

"China accounts for about two-thirds of global growth," he added, "so the spillover with trade, confidence, business” can be significant.

Although China will bear the brunt of the impact, its complicated international ties will transmit some of the pain to the U.S. and other countries.

“The virus will have a smaller impact on the rest of the world, through a hit to the global tourism industry and short-term supply chain disruption in the first half of this year,” Moody’s analysts wrote.

A number of U.S. companies, including Apple, have warned that closings of factories and stores in China are hurting both the supply of and demand for their products. Additionally, the grounding of U.S. flights into and out of the country chokes off spending by the Chinese consumer, which accounts for 0.4 percentage point of global gross domestic product, according to the investment bank Goldman Sachs.

Roubini doesn’t think the damage caused by the coronavirus will be enough to tip the U.S. economy into recession, though he said economic growth in the U.S. and Europe may “surprise on the downside.” He sees U.S. economic growth slowing from 2 percent to 1.7 percent, or a little more.

While that suggests there’s no need to worry about an imminent financial crisis, Roubini believes there are some warning signs on the horizon.

“Last time around was housing, and mortgages, and banks were regulated,” he said. “This time around, it’s going to be corporate debt and shadow banks that lend to these corporates. Eventually you could have a credit boom and bust and a crisis -- give it a couple of years.”
AI Disclaimer: An advanced artificial intelligence (AI) system generated the content of this page on its own. This innovative technology conducts extensive research from a variety of reliable sources, performs rigorous fact-checking and verification, cleans up and balances biased or manipulated content, and presents a minimal factual summary that is just enough yet essential for you to function as an informed and educated citizen. Please keep in mind, however, that this system is an evolving technology, and as a result, the article may contain accidental inaccuracies or errors. We urge you to help us improve our site by reporting any inaccuracies you find using the "Contact Us" link at the bottom of this page. Your helpful feedback helps us improve our system and deliver more precise content. When you find an article of interest here, please look for the full and extensive coverage of this topic in traditional news sources, as they are written by professional journalists that we try to support, not replace. We appreciate your understanding and assistance.
Newsletter

Related Articles

0:00
0:00
Close
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
House Republicans Move to Defund OECD Over Global Tax Dispute
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
Intel Reports Revenue Beats but Sees 81% Rise in Losses
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
President Trump Diagnosed with Chronic Venous Insufficiency After Leg Swelling
CEO Resigns Amid Controversy Over Relationship with HR Executive
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
Tulsi Gabbard Unveils Evidence Alleging Political Manipulation of Intelligence During Trump Administration
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Trump Announces Coca-Cola to Shift to Cane Sugar in U.S. Production
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
Zelensky Reshuffles Cabinet to Win Support at Home and in Washington
"Can You Hit Moscow?" Trump Asked Zelensky To Make Putin "Feel The Pain"
Church of England Removes 1991 Sexuality Guidelines from Clergy Selection
Superman Franchise Achieves Success with Latest Release
Hungary's Viktor Orban Rejects Agreements on Illegal Migration
Air India Pilot’s Mental Health Records Under Scrutiny
Jamie Dimon Warns Europe Is Losing Global Competitiveness and Flags Market Complacency
Moonshot AI Unveils Kimi K2: A New Open-Source AI Model
Martha Wells Says Humanity Still Far from True Artificial Intelligence
Nvidia Becomes World’s First Four‑Trillion‑Dollar Company Amid AI Boom
EU Delays Retaliatory Tariffs Amid New U.S. Threats on Imports
Trump Proposes Supplying Arms to Ukraine Through NATO Allies
US Opens First Rare Earth Mine in Over 70 Years in Wyoming
Bitcoin Reaches New Milestone of $116,000
Severe Heatwave Claims 2,300 Lives Across Europe
Declining Beer Consumption Signals Cultural Shift in Germany
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
Western Europe Records Hottest June on Record
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
China’s Central Bank Consults European Peers on Low-Rate Strategies
France Requests Airlines to Cut Flights at Paris Airports Amid Planned Air Traffic Controller Strike
Poland Implements Border Checks Amid Growing Migration Tensions
Emirates Airline Expands Market Share with New $20 Million Campaign
Amazon Reaches Milestone with Deployment of One Millionth Robot
Yulia Putintseva Calls for Spectator Ejection at Wimbledon Over Safety Concerns
House Oversight Committee Subpoenas Former Jill Biden Aide Amid Investigation into Alleged Concealment of President Biden's Cognitive Health
×