GoFounders Service Message Coronavirus (COVID-19) Update

The coronavirus outbreak has spread across the globe and has been declared a public health emergency of international concern in January by the World Health Organization (WHO). The WHO has since raised its global risk outlook and announced that new cases outside China exceeded those within for the first time on February 26th. The global economic strain of this outbreak will likely extend into the next quarter even as China recovers. Bruce Kasman, Chief Economist, J.P. Morgan. “We now forecast a 1Q20 stall in global GDP growth, representing the first time global growth has stalled outside of a recession.” (1)

Dubbed COVID-19, this coronavirus is the specific illness related to the current epidemic. The acronym, provided by the World Health Organization, stands for “coronavirus disease 2019,” referring to the year the virus was first detected. The name of the virus is SARS-CoV-2 and it’s not one type of virus.  The coronavirus is a large family of viruses that also includes SARS and other respiratory illnesses large and small. Coronaviruses can be spread between animals and people, as we have seen with this current strain.

The term “corona,” which is from a Latin root meaning crown or ring of light, refers to the shape of the virus under a microscope. 

You may have heard of or remember a coronavirus known as SARS emerging in China almost twenty years ago that killed hundreds of people and started an economic wave of panic throughout the world. This virus is the one now wreaking havoc across China and is already much more damaging than the one we saw back then. Twenty years ago, SARS sickened 8,098 people and killed 774 before containment. The new coronavirus, that originated in the central Chinese city of Wuhan, has already killed more than hundreds of people, infected over many thousands, and is affecting at least 25 countries and territories. The virus continues to spread even though Chinese officials have locked down Wuhan and several other cities.

Neil Shearing, Group Chief Economist at Capital Economics, had this to say:  “The outbreak has the potential to cause severe economic and market dislocation. But the scale of the impact will ultimately be determined by how the virus spreads and evolves, which is almost impossible to predict, as well as how governments respond.”

Apparently, the risk is being compounded because the world outside China has changed a lot since the first outbreak in 2003. Companies have been encouraged by globalization to build supply chains that make economies much more interconnected and are no longer limited by national borders. The major central banks are much less able to fight economic downturns since the 2008 financial crisis, and global debt levels are at peak levels.   Consequently, this virus is threatening global supply chains and disrupting companies. READ MORE