As soon as the month of February of this year 2020 ends, the number of those infected with the Covid-19 coronavirus has converted 80,000 people and has generated a balance of some 2,700 dead. Every effort to control the outbreak has led to the establishment of total or partial quarantines in several provinces and cities of China, which has also been a measure taken in other countries affected by this virus. At this time there are restrictions on movements that are affecting some 500 million people.

While the human cost of the virus continues to increase in China and other countries, it is also taking its toll on different industries. And it is the minimization of demand and the interruption of supply that many industrial sectors are suffering that affect the uncertainty around the global economy.The size of the economy in China and its geostrategic position has changed since 2003. When the SARS outbreak broke out, China accounted for 4% of global GDP and the sixth largest economy in the world. But today it represents more than 16% of global GDP and is the second largest economy in the world after the United States. In addition to this, we know that China has historically been the largest source of growth in the world economy and only in 2019 its contribution grew to 39%. Globalization has positioned China as the fundamental piece in the operation of the complex supply chains on which the production of companies around the world depend. Therefore, the closure of these factories in the Chinese provinces identified by the virus has generated a great shock in a wide range of economic sectors. China is the world’s leading importer of raw materials, so this market is also accusing the impact of the coronavirus. In the same way, the reduction of industrial activity in China has also led to a lethargy for the copper market, the Asian giant takes half of the world demand. On the demand side, the impact has already been felt in the sectors related to travel and tourism. It has been assumed then that the airline sector suffers this year a large loss of revenue worth more than 26 billion euros because it is believed that this demand for air travel will fall for the first time in the last 11 years.

Finally, what can be argued is that what happens from now on will greatly depend on how the Covid-19 crisis evolves. In the best of scenarios, the coronavirus would be able to contain itself or at least slowly remit in early spring, which would give a respite to both the Chinese economy and the rest of the global economic activities that depend on it. But if the virus continues to spread throughout China, the Far East and other regions, uncertainty and disturbances would remain and grow. They would follow the restrictions of movements and the chains of supplies that are paralyzed at the moment would decompose totally and would inevitably come the closing of factories, both in China and in other countries. Many companies would try to study alternatives to their supply chains that do not involve China, but what experience has told us and has shown us over the years is that the latter is much easier said than done.

Pierre El Sokhn