Coronavirus threatens global economic crisis as new figures show Chinese manufacturing sector has slumped

Saturday, February 29, 2020
By Paul Martin

Survey came as global stock markets continue to fall over fears about the virus
Purchasing Managers’ Index fell to 35.7 from January’s 50 on 100-point scale
Numbers below 50 indicate that activity is contracting
Coronavirus has killed 2,900 people globally and infected more than 85,000

29 February 2020

There are emerging fears that the coronavirus outbreak could spark a global economic crisis after China’s manufacturing sector plunged further than expected this month.

An official survey showing the plunge added to mounting evidence of the vast cost of the disease that emerged in central China in December.

The monthly purchasing managers’ index (PMI) issued by the Chinese statistics agency and an industry group fell to 35.7 from January’s 50 on a 100-point scale on which numbers below 50 indicate activity contracting.

And stock markets in Britain and the US also fell amid fears over the outbreak.

A sub-measure of imports plummeted, highlighting the shock waves spreading through China’s Asian neighbors and other suppliers of components and raw materials to its factories, which assemble most of the world’s smartphones, toys, home appliances and other consumer goods.

The virus has now hit 59 countries across the globe, with more than 2,900 people killed and over 85,000 infected since it was first detected in the central Chinese city of Wuhan late last year.

‘Supply chains are likely to remain disrupted even if China’s factories go back to full production,’ due to spreading travel bans and other anti-virus controls abroad, said Iris Pang of ING in a report.

She said it was ‘incredibly unlikely’ the global flow of goods would recover even in April.

The decline was widely anticipated after the government extended the Lunar New Year holiday to keep factories and offices closed but the figure was even more severe than many forecasters expected.

Many analysts expected a result in the low 40s, which already would have been the lowest since the PMI first was issued in 2002.

Stock markets in the United States, Europe and Japan tumbled by about 10 per cent over the past week after outbreaks in South Korea, Iran and Italy.

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