Fears over the impact of coronavirus on the European economy are mounting as cases of the disease in Italy increased dramatically in the past week.
It’s already influenced stock markets, with the FTSE 100, the French CAC and the German DAX all registering drops.
US stock markets also fell significantly on Thursday with the Dow Jones dropping nearly 1,200 points and the S&P 500 dropping 4% in a single day.
If they continue to fall, it could influence consumers whose wealth is tied to the stock market and impact spending.
Stocks fell as the virus continued to spread overseas with Italy confirming hundreds of cases of the novel coronavirus COVID-19 and placing nearly twelve towns on lockdown in the north of the country last weekend.
The EU’s economic commissioner told Euronews earlier this month that the longer the duration of the epidemic, the harder the impact of it, will be, especially because as China is such a large player in the world’s economy.
“The importance of the Chinese economy in the global economy it’s enormously changed since the last epidemic that we had in 2003 that was the SARS epidemic. The Chinese economy was at the time 4% of the global economy, it is now almost 18% of the global economy,” said economic commissioner Paolo Gentiloni.
“So if we have a problem in China, we will have spillover of this problem on supply chains of manufacture on travel on tourism [and] on other sectors.”
Globally, there are an estimated 85,000 cases of Covid-19 and some 2,900 deaths. The virus has been detected in 58 countries.
Depending on the outbreak, this shock could send an already weak European economy into recession, economists say.
A pandemic is defined as “the worldwide spread of a new disease” by the World Health Organization, but the international organisation has not yet declared COVID-19 as such.
The tourist sector in both Italy and France already are being effected negatively.
Airlines are already feeling the impact after many cancelled all flights to mainland China. The International Air Transport Association estimated that Asian-Pacific carriers could lose an estimated $27.8 billion (€25 billion) in 2020.