Suspended flights, cancelled tours, temporary restaurant closures, and millions of people in lockdown amid an extended nationwide holiday are just some of the results of a contagious new coronavirus that has caused more than 80 deaths in China.
At the epicentre of the outbreak is Wuhan, a Chinese city of more than 11 million people, where the disease was first recorded and is now home to the highest number of cases.
Touted as China’s Chicago, fast-growing Wuhan was expected to record a regional economic growth rate of up to 7.8 percent in 2020, according to local government estimates. This would make it a key pillar of growth in China’s sluggish economy, which is expected to grow by just 6 percent, according to central government figures.
However, as shutters roll down in shops and public transportation comes to a standstill as the coronavirus spreads, one of China’s brightest economic spots could end up dimming the prospects of a country already struggling with its weakest economic growth in 29 years.
China said on Monday that its finance ministry and National Health Commission have extended 60.33 billion yuan ($8.74bn) to help contain the virus.
International airlines ranging from Taiwan’s China Airlines to Singapore’s Scoot have cancelled flights to and from Wuhan. According to data from aviation data analytics firm Cirium, Wuhan receives 55 international flights each week from more than 20 countries.
In response to questions from Al Jazeera, AirAsia and Cathay Pacific referred to official statements regarding the suspensions of flights from Wuhan.
As of Sunday, Cathay Pacific extended the suspension of its flights to and from Wuhan until the end of March and allowed crew members and front-line airport employees to wear face surgical masks.
Meanwhile, AirAsia has temporarily cancelled all flights from Kota Kinabalu in Malaysia, Bangkok and Phuket to Wuhan until January 28, resulting in some three flights suspended daily, based on their weekly frequency schedule.
Passengers have been offered full refunds, and the opportunity to book a new travel date within 30 days, or credit an AirAsia account to be used within 90 days, the airline said.
Neither airline responded directly to questions about the costs they might incur from the suspensions of their daily flights to Wuhan.
As consumption spending has become the most important growth driver for the Chinese economy in recent years, a key near-term risk is a negative effect the virus has on Chinese consumer sentiment, according to Rajiv Biswas, chief economist for Asia Pacific at IHS Markit.
“With many entertainment venues in China, including an estimated 11,000 cinema theatres as well as major resorts such as the Disneyland park in Shanghai having temporarily closed due to the Wuhan virus outbreak, the immediate negative impact on China’s entertainment industry is already significant,” he said in a note shared with Al Jazeera.
Other Asia-Pacific countries are also vulnerable to a further economic slowdown in China, as well as a decline in Chinese tourism as the country imposes travel bans on outgoing group tours, Biswas said.
“The rapid rise in household incomes in China has triggered a boom in Chinese tourism visits abroad, which have risen from 20 million in 2003 to 150 million in 2018. Consequently, the vulnerability of many Asia-Pacific economies to a slowdown in Chinese tourism visits has increased significantly over the past two decades,” he said.
How bad can it get?
On Monday, shares of tour operators fell in Thailand and Japan as China banned outbound group tours to contain the spread of the virus.
Singapore is also bracing for economic fallout from the virus.
“We certainly expect there to be an impact on our economy, business and consumer confidence this year, especially as the situation is expected to persist for some time,” Singapore’s Trade Minister Chan Chun Sing said on Monday.
At a news conference, Chan said Singapore’s government is considering support measures for hard-hit sectors such as tourism.
Chinese nationals make up the largest share of visitors to Singapore, one of the worst-hit countries outside of China in the 2003 outbreak of Severe Acute Respiratory Syndrome (SARS), another strain of the coronavirus which killed 800 people globally.
A 2018 study estimated that another global influenza pandemic could kill 720,000 people and cost $500bn, or 0.6 percent of global income per year.
That is within the range of estimated global losses from global warming (between 0.2 percent and 2 percent of global income).
Lower and middle-income countries would suffer the most, with an estimated 1.6 percent of annual income lost if an influenza pandemic occurred.
High-income countries are expected to lose about 0.3 percent of the annual income.
China-wide, if spending on things including discretionary transport and entertainment dropped by 10 percent, overall gross domestic product (GDP) growth would fall by about 1.2 percentage points, according to “back of the envelope” estimates from Shaun Roache, chief economist for the Asia Pacific region at global ratings agency Standard & Poor’s.
G7 nations to boost climate finance
G7 leaders agreed on Sunday to raise their contributions to meet an overdue spending pledge of $100 billion a year by rich countries to help poorer countries cut carbon emissions and cope with global warming, but only two nations offered firm promises of more cash.
Alongside plans billed as helping speed infrastructure funding in developing countries and a shift to renewable and sustainable technology, the world’s seven largest advanced economies again pledged to meet the climate finance target.
But climate groups said the promise made in the summit’s final communique lacked detail and the developed nations should be more ambitious in their financial commitments.
In the communique, the seven nations – the United States, Britain, Canada, France, Germany, Italy and Japan – reaffirmed their commitment to “jointly mobilise $100 billion per year from public and private sources, through to 2025”.
“Towards this end, we commit to each increase and improve our overall international public climate finance contributions for this period and call on other developed countries to join and enhance their contributions to this effort.”
After the summit concluded, Canada said it would double its climate finance pledge to C$5.3 billion ($4.4 billion) over the next five years and Germany would increase its by 2 billion to 6 billion euros ($7.26 billion) a year by 2025 at the latest.
There was a clear push by leaders at the summit in southwest England to try to counter China’s increasing influence in the world, particularly among developing nations. The leaders signalled their desire to build a rival to Beijing’s multi-trillion-dollar Belt and Road initiative but the details were few and far between.
Johnson, host of the gathering in Carbis Bay, told a news conference that developed nations had to move further, faster.
“G7 countries account for 20% of global carbon emissions, and we were clear this weekend that action has to start with us,” he said as the summit concluded.
“And while it’s fantastic that every one of the G7 countries has pledged to wipe out our contributions to climate change, we need to make sure we’re achieving that as fast as we can and helping developing countries at the same time.”
Some green groups were unimpressed with the climate pledges.
Catherine Pettengell, director at Climate Action Network, an umbrella group for advocacy organisations, said the G7 had failed to rise to the challenge of agreeing on concrete commitments on climate finance.
“We had hoped that the leaders of the world’s richest nations would come away from this week having put their money their mouth is,” she said.
Developed countries agreed at the United Nations in 2009 to together contribute $100 billion each year by 2020 in climate finance to poorer countries, many of whom are grappling with rising seas, storms and droughts made worse by climate change.
That target was not met, derailed in part by the coronavirus pandemic that also forced Britain to postpone the U.N. Climate Change Conference (COP26) until later this year.
The G7 also said 2021 should be a “turning point for our planet” and to accelerate efforts to cut greenhouse gas emissions and keep the 1.5 Celsius global warming threshold within reach.
European Commission President Ursula von der Leyen said the G7 leaders had agreed to phase out coal.
The communique seemed less clear, saying: “We have committed to rapidly scale-up technologies and policies that further accelerate the transition away from unabated coal capacity, consistent with our 2030 NDCs and net zero commitment.”
The also pledged to work together to tackle so-called carbon leakage – the risk that tough climate policies could cause companies to relocate to regions where they can continue to pollute cheaply.
But there were few details on how they would manage to cut emissions, with an absence of specific measures on everything from the phasing out of coal to moving to electric vehicles.
Pettengell said it was encouraging that leaders were recognising the importance of climate change but their words had to be backed up by specific action on cutting subsidies for fossil fuel development and ending investment in projects such as new oil and gas fields, as well as on climate finance.
British environmentalist David Attenborough appealed to politicians to take action.
“We know in detail what is happening to our planet, and we know many of the things we need to do during this decade,” he said in a recorded video address to the meeting.
“Tackling climate change is now as much a political and communications challenge as it is a scientific or technological one. We have the skills to address it in time, all we need is the global will to do so.”
($1 = 1.2153 Canadian dollars)
(Reporting by Elizabeth PiperAdditional reporting by William James and Kate Abnett in Brussels and Andreas Rinke in BerlinEditing by William Maclean, Raissa Kasolowsky and Frances Kerry)
Canadian dollar goes up from Friday’s 4-week low
The Canadian dollar edged higher against its U.S. counterpart on Monday as oil prices climbed and investors looked past domestic data showing factory sales falling in April, with the loonie clawing back some of Friday’s decline.
“Zooming out from the disruptions seen in the auto industry, the outlook for manufacturing sales is not all that bad,” Omar Abdelrahman, an economist at TD Economics, said in a note.
“The reopening of provincial economies and strength in Canada‘s largest export market (the U.S.) should provide a lift to demand,” Abdelrahman added.
The price of oil, one of Canada‘s major exports, was supported by economic recovery.
U.S. crude prices rose 0.9% to $71.56 a barrel, while the Canadian dollar was trading 0.2% higher at 1.2143 to the greenback, or 82.35 U.S. cents. On Friday, it fell to its weakest since May 14 at 1.2177.
Speculators have cut their bullish bets on the Canadian dollar, the strongest G10 currency this year, data from the U.S. Commodity Futures Trading Commission showed on Friday. As of June 8, net long positions had fallen to 45,281 contracts from 48,772 in the prior week.
A stronger Canadian dollar is usually seen hurting exporters, but the nature of the global economic recovery could help firms pass on their higher costs from the currency to customers, leaving exporters in less pain than in previous cycles.
Investors were awaiting a Federal Reserve policy announcement on Wednesday. Expectations that the Fed would stick to its dovish course have helped cap U.S. and Canadian bond yields.
Canada‘s 10-year yield touched its lowest level since March 3 at 1.365% before recovering to 1.381%, up 1.3 basis points on the day.
(Reporting by Fergal Smith; Editing by Bernadette Baum)
Toronto stock exchange dips as losses in miners
Toronto stock exchange index edged lower on Monday, as losses in mining stocks and dismal domestic manufacturing data overshadowed gains in energy stocks.
* The materials sector, which includes precious and base metals miners and fertilizer companies, lost 0.7% as gold futures fell 1.6% to $1,848.2 an ounce. [GOL/]
* Canadian factory sales slipped by 2.1% in April from March on lower sales of transportation equipment, as well as subdued petroleum and coal products sector, Statistics Canada said.
* At 9:43 a.m. ET (13:43 GMT), the Toronto Stock Exchange’s S&P/TSX composite index was down 14.52 points, or 0.07%, at 20,123.83.
* The energy sector climbed 1.4% as U.S. crude prices were up 1% a barrel, while Brent crude rose 0.9%. [O/R]
* Financials slipped 0.3%, while industrials fell 0.1%.
* On the TSX, 120 issues were higher, while 107 issues declined for a 1.12-to-1 ratio favouring gainers, with a trading volume of 22.35 million shares.
* TSX’s top gainers were paper and packaging company Cascades Inc <CAS.TO> and IT firm Kinaxis Inc <KXS.TO>, jumping 4.1% and 4.0%, respectively.
* Biggest decliners were uranium producers Nexgen Energy Ltd <NXE.TO>, down 5.9%, followed by Cameco Corp falling 5.5%.
* The most heavily traded shares by volume were Canadian Natural Resources Limited <CNQ.TO>, BCE Inc <BCE.TO>, and Hut 8 Mining Corp <HUT.TO>
* Twenty-two stocks hit fresh 52-week highs on the TSX, while there were no new lows.
* Across all Canadian issues, there were 95 new 52-week highs and four new lows, with total volume of 43.57 million shares.
(Reporting by Amal S in Bengaluru; Editing by Rashmi Aich)
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