Investment Institute
Macroeconomic Research

Coronavirus: First thoughts on the potential economic impact on China

  • 04 February 2020 (5 min read)

Key points

  • The escalation of the novel coronavirus (2019-nCoV) outbreak has caused serious concerns among the Chinese public, disrupting both social and economic activity, and putting the country’s health system under strain. As the situation is still unfolding, uncertainties abound regarding the duration and severity of the epidemic, and how it will eventually be tackled. There are still considerable challenges ahead and as such, making a call on the outcome at this stage is extremely difficult. This also makes assessing the economic impact challenging, although it is fair to say that the previous consensus outlook of “smoother sailing” for the Chinese economy in 2020 has been significantly called into question.
  • There are a number of plausible ways in which the situation could evolve from here. In a quick-resolution scenario, the outbreak could be brought down control in the coming weeks – similar to the Severe Acute Respiratory Syndrome (SARS) in 2003 – confining the negative growth impact to the first quarter of this year. As economic fundamentals remain unscathed, some rebound in pent-up demand, aided by policy stimulus, should drive a strong recovery in the subsequent quarters. The epidemic would, therefore, represents a one-quarter shock – like SARS, but this would still impose downside risk to our growth forecast given that no all lost output can be recouped.
  • An intermediate scenario features a slower resolution, which would deepen and prolong the economic downturn during the first half of 2020 and weaken the recovery thereafter. This could see full-year growth slow to below 5%, with rising financial risks and much lower asset prices. A worst-case scenario would consider the virus being uncontainable. Quantifying this risk is difficult, but we would expect severe global repercussions if both China – and the world – fail to prevent a global pandemic.

Have our latest insights delivered straight to your inbox

Subscribe to updates.

Related Articles

Macroeconomic Research

India’s economy: A compelling growth and investment story but challenges remain

  • by Danny Richards
  • 11 June 2024 (10 min read)
Macroeconomic Research

Eurozone corporate profits outlook: How they could influence the ECB

Macroeconomic Research

Will the US presidential election endanger an investment boom?


    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Back to top