In an interview with the website of the Strategic Council on Foreign Relations, Dr. Saeed Attar said that in order to understand the potential impact of the crisis on the global economy, we first need to know the share of the countries involved in the global economic crisis. The following table shows the share of the affected countries in the global economy out of 120,000 people that have been infected and more than 4,300 who lost their lives worldwide.

“Of the 12 countries that have been least hit by the crisis, 8 have at least 1 percent of global GDP,” the political economy analyst said. More than 58 percent of world production also belongs to these eight countries. In addition to Iran, other crisis-affected countries account for at least 1 percent of world trade, and these 11 countries account for more than 51% of world trade.

Countries Affected by Corona Crisis (Economic Considerations)

Ranking Number of Infected (up to March 10) Death Toll (up to March 10) Global GDP Share 2019 (WTO) World Trade Share 2019 (IMF)
China 80,894 3,237 15% 12.8%
Italy 31,506 2503 2% 2.8%
Iran 16,169 988 0.5% 0.6%
Spain 11,826 533 1.5% 1.8%
Germany 9367 26 4% 8%
South Korea 8,413 84 1.7% 3.1%
France 7,730 175 3% 3%
United States 6522 116 23% 8.5%
Switzerland 2742 27 0.7% 1.6%
United Kingdom 1950 71 3% 2.5%
Netherlands 1705 43 0.9%- 3.7%
Japan 822 29 5% 3.8%

Attar said that looking at the statistics, more than half of the global economy now belongs to countries that are affected by the Coronavirus, Attar said: “The appearance is that the alarm has been sounded for a global economic crisis.” However, can we all conclude that the world economy is in crisis or are we facing a serious economic crisis in the world similar to the crisis of the 1990s and 2008-2009? This question cannot be answered by relying on the statistics of patients and death tolls from the Coronavirus or from economic statistics.

Is the World Facing A New Economic Crisis?

 The Yazd University professor noted that China’s economy has lost more than a trillion dollars over the past two months and that the losses continue, adding that some estimates, including statistics from the Oxford Institute of Economics, show that China recorded a drop of six percent in economic growth in 2019 compared to 2018. Also, due to the spread of the Coronavirus, the growth is expected to further decline to 5.5 percent or 5 percent. Other reports have pointed to numbers in the same range.

“So far, the jobs of more than 10 million people are at serious stake and the continuation of the crisis could lead to their unemployment,” he said. Also, a decline in purchasing power in China could deal a serious blow to the Chinese economy. The country, which has been adopting a focus on domestic markets for many years after a long period of focusing on exports, is vulnerable to declining domestic demand.

Attar described other effects of the Corona crisis on the world economy, the big drop in sales of some international airlines, and the sharp decline in the international tourism industry and its value chain in many countries’ economies, and said: “The world’s leading stock markets also experienced the highest fall on Black Monday, March 9 since 2008.

The analyst, however, said that this small virus would scratch the body of large economies, stressing that it is not possible to conclude, however, that the world is certainly facing a new economic crisis but it seems most major economies in crisis have enough strong governance systems to contain the crisis at a lower economic cost.

The professor said that the Corona crisis has increased the economic risk, adding that it can be surmised that as global economic growth slows, oil prices will further drop in 2020. It is also to be expected that the global gold price will go higher, indicating the move of some global investors towards low risk markets such as the gold market.

He said as the crisis continues, some economic unions that are bound by geographic borders, such as the European Union, will probably suffer more, but the Federal Reserve’s rapid response to the unprecedented half-percent cut in interest rates and White House and Congressional action on compiling separate support packages for workers and companies in the United States on the one hand, and the actions of governments and parliaments of 10 countries with proper governance alongside the European Central Bank’s preventive measures a new round of which will begin on March 18, and European institutions on the other hand all confirm the relative readiness of these countries for managing the Corona crisis.

Noting that China is the only important economy in the world affected by Level 7 high alert crisis, he said: “China is the world’s largest factory and many of the big Western plants, including General Motors, are selling their products in China more than in Europe and the US. Therefore, they depend on China’s domestic demand, so if we take into account only China the Corona crisis has clearly hit the global supply and demand chains.

This is a blow that will make the global economy grow slower than previously projected in 2020, and is likely to be a hit in the medium term as some of the world’s most important factories may leave China to settle in other countries especially in Thailand, Vietnam and Indonesia.

Emphasizing that the Corona crisis will lead to global supply and demand decline for at least half of 2020, he said, despite the blow dealt on global economy by Corona and the slowdown in global economic growth, the governance systems skills of the major countries involved in the Corona crisis are to the extent that they would not let the global economy fall into a global economic crisis similar to those of the 1990s and 2008-2009, namely the collapse of the dominoes of important economic sectors.