New coronavirus outbreak threatens green shoots of global recovery

THE global economy has been on the mend since the last quarter of 2019, thanks in no small part to the easing of US-China trade hostilities and rate cuts by major central banks. But can it survive the fallout from the novel coronavirus outbreak?

It may be too early to gauge the temperature of the global economy as a result of the outbreak, which has hurt everything from the trade in goods, tourism, retail sales and manufacturing activities to domestic consumption, the lynchpin of many economies. Business sentiment has also eroded. No one is certain how long the outbreak, which has killed more than 1,000, will last or how much more havoc it could wreak. More disconcerting is that the new virus has killed more people than the 2003 Sars epidemic - all but two deaths are in mainland China - and has spread from people with no travel history to China.

There are two fronts in which the coronavirus epidemic could batter the global macro landscape. The first involves supply shocks should the outbreak worsen and hamper economic production. This impact could be especially deep given the integrated nature of Asia's supply chain.