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Why is coronavirus more dangerous than SARS for the global economy

UNITED STATES (OBSERVATORY NEWS) — In the early 2000s, when SARS was raging in Asia, there were no billionaires in China. Since then, the Chinese economy has grown almost nine times, and exports have reached a record. This means that the outbreak of the deadly coronavirus is likely to affect the global economy more than the epidemic that claimed the lives of dozens of people.

The SARS virus has infected more than 8,000 people and killed 77. Sixteen years later, fear of a coronavirus is creeping around the world, for which there is no vaccine.

Compared to previous outbreaks, coronavirus is likely to have a deeper economic impact due to the fact that the Chinese economy has grown significantly and its ties with the US have deepened. In 2003, when the SARS epidemic began, China’s GDP was $ 1.6 trillion, and today it is over $ 13 trillion.

During this time, China has become a center of attraction for US companies that want to improve their financial results. Today they are at the forefront of a spreading epidemic that has already claimed the lives of several hundred people. In 2003, when the SARS epidemic broke out, some US companies operating in China had not yet entered this market. One example is the Las Vegas Sands casino and hotel chain, where the attendance of locations in Macau has dropped by 80% due to the coronavirus. Last week, the owner of Las Vegas Sands billionaire Sheldon Adelson said that all employees in Macau wear protective masks, and visitors measure the temperature to prevent infection from entering the game rooms. How much such precautions will cost the gaming magnate will become clear after the publication of the quarterly report.

“I think it is reckless to say that we can reduce costs so as to at least somehow mitigate the damage from the ongoing decline in attendance by 80%. For any company, this is a very serious problem, ”said Rob Goldstein, president and chief operating officer of the gambling chain.

China’s economy is one of the fastest growing in the world. There is a real threat that GDP growth may slow due to coronavirus.

China is currently exporting more products than ever in its history. In 2018, China was the largest supplier of such products in the US as electrical engineering ($ 152 billion), industrial equipment ($ 117 billion), furniture and bedding ($ 35 billion), toys and sports equipment ($ 27 billion), and plastic products ($ 19 billion) .

The number of Chinese billionaires is also growing. The richest man in the country is Al Maaba co-founder Jack Ma, who recently stepped down as chairman of the Internet giant’s board of directors. His fortune is estimated at $ 42 billion.

According to Nielsen, overseas travel has become one of the key indicators of improving the quality of life for the affluent population of China. The number of Chinese tourists in the world is constantly growing. According to a 2017 Nielsen study, on his last trip abroad, an average Chinese spent about $ 762 per person on purchases, while shopping from other countries averaged $ 486.

Due to a coronavirus outbreak, Starbucks has announced the closure of more than 50% of its coffee houses in mainland China. Institutions are closed and other companies. For example, the H&M retailer has closed at least 45 stores and suspended all of its employees’ business trips to China and vice versa. IKEA has closed half of 30 stores in mainland China. In addition, the epidemic affected the work of local Coca-Cola plants.

China is the largest market for Marriott outside the United States. In 2018, the company began to cooperate with Alibaba: under the terms of the agreement, Chinese tourists can book rooms in hotel chains through a special Alibaba website for travelers.

Last week, Marriott announced that it would not levy cancellation fees for hotels in mainland China, Hong Kong, Macau and Taiwan until February 29th. Cancellation fines will also not be charged to tourists from these regions who were planning to stay at Marriott hotels in other countries.

Due to the coronavirus, attendance at Las Vegas Sands gambling establishments in Macau fell by 80% *, although usually there is no end to those who wish to try their luck on the lunar calendar. “The current situation is very serious and extreme,” said company owner Sheldon Adelson last week. – The priority for us is now the health and safety of our employees and visitors. We are doing everything in our power and are rendering all possible assistance to the authorities of Macau and China.”

* On February 4, it became known that the Macau authorities asked the owners of the casino to suspend the work of the institutions for 14 days due to the spread of the coronavirus. When exactly the casino will be closed, it was not reported.

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This article is written and prepared by our foreign editors writing for OBSERVATORY NEWS from different countries around the world – material edited and published by OBSERVATORY staff in our newsroom.

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