The Corona Effect


IO – Chinese official have reported the total number of coronavirus cases now stands above 75,000, with a death toll reaching more than 2,000 people. All but five of the deaths have occured in China, and the vast majority of those infected are in China, as well. Which see large numbers of Chinese tourists every year, have reported over one hundred cases and only a handful of fatalities. The actual number of cases could, of course, be much higher. According to Dr. Anthony Fauci, director of the National Institute for Allergy and Infectious Diseases based in the U.S.A., “What is not getting counted is a large number of people who are either asymptomatic or minimally symptomatic, so the denominator of your equation is likely much much larger.” 

Fears the coronavirus could turn into a global pandemic are valid, but the critical question, when will it peak? 

There are those who believe that once warmer weather arrives, the virus will plateau. While we can be cautiously optimistic, medical experts warn that most coronaviruses are not seasonal. However, according to Amesh Adalja, an infectious disease physician at Johns Hopkins, it appears this coronavirus, known as COVID-19, has the characteristics of a common-cold and could taper off with the approach of spring and summer. Still, that is only good news for the Northern Hemisphere because when that happens, the southern half of the globe heads into fall and winter. Which means in countries like Australia, there could easily be an increased transmission of the disease. 

Such uncertainty, about how far spread is the disease and when it will finally become less of a threat has already caused disruptions in the global economy, not just China. And as the COVID-19 coronavirus continues, the impact on business will multiply. 

Already the airline and tourism industries have been hard hit. Out of an estimated 1.4 billion tourists annually, more than 10 percent are outbound from China. The telecoms and automoblle sectors have also suffered due to disruptions in the global supply chain, of which China is an important player. 

What this means for Indonesia will depend, of course, on how long the COVID-19 remains a threat, but what is certain is that there will be economic costs. Out of Indonesia’s 16 million tourist arrivals in 2019, more than 2 million, or 12.5 percent came from China. As fear spreads about getting infected, less and less people are travelling in general, which 

means, like elsewhere, Indonesia’s airlines and hotels will suffer, not to mention local economies such as Bali’s which rely heavily upon tourism. 

Because China is Indonesia’s biggest trading partner, obviously exports to China will decline as Its economy slows. But it will not just be Indonesia-China trade that will be affected: as other economies in the region begin to feel the pinch, especially those who trade heavily with China, so too will their economies take a hit and as a consequence regional trade will decline. 

Another, yet even more interesting question is how the COVID-19 virus will affect China’s relations with the outside world in general. Multinational companies will need to rethink their supply- chain risk with China, which could prompt boardrooms to pivot towards other countries to hedge their risk. In its foreign relations, there could be a spillover effect, as well, depending upon how Beijing handles the crisis. Any major misstep, and it is a sure bet that China’s prestige will be dented, which will then prompt politicians to reconsider their alliances.