The coronavirus outbreak may have a two-quarter hit on China's economy, says Stephen Roach - CNBC | Canada News Media
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The coronavirus outbreak may have a two-quarter hit on China's economy, says Stephen Roach – CNBC

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5 years ago

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The coronavirus outbreak is likely to hit China’s economy over the course of two quarters, Stephen Roach said on Friday.

“The Chinese economy is flat-lining right now,” said Roach, who is a senior fellow at Yale University.

“The impact of unprecedented quarantines and restrictions on travel have brought the Chinese economy right now to a virtual standstill,” Roach told CNBC’s “Squawk Box.”

He said that indicators of economic activity in China, such as coal consumption and transportation traffic, are “well below” the levels this time last year, or in the aftermath of any recent Lunar New Year holidays.

Beijing started imposing large-scale lockdowns and quarantining cities in late January, which halted factory and economic activities that are gradually coming back online.

The outbreak of the coronavirus has struck over 82,000 globally, according to the Feb. 27 figures from the World Health Organization. Known formally as COVID-19, the virus has spread beyond China, pummeling markets.

Still, Roach said he hoped the Chinese government will not let up on efforts to contain the coronavirus outbreak even though there will be short-term economic impact.

“A premature relaxation of quarantines and travel restrictions could lead to a relapse that would be far more dangerous than the outbreak at present,” said Roach, who lived in China from 2007 until 2012 during his tenure as chairman of Morgan Stanley Asia.

“The Chinese would want to avoid that at all cost. That’s important for the rest of the world where the infection is clearly in the process of spreading right now,” added Roach.

Economic disruption to last longer than SARS

Roach said he expected the disruption from COVID-19 to last longer than the damage SARS wrought 17 years ago.

“My baseline view … is that this will last longer than the SARS-related disruption, which was one quarter. This is probably a two-quarter hit on the Chinese growth rate,” he said.

That is because the Chinese and the world economy was already growing more slowly than in 2002-2003 when severe acute respiratory syndrome hit.

“The upside of any V-shaped recovery is likely to be shallower than it was 17 years ago,” he said.

Although governments are already pushing out stimulus packages to help cope with the economic impact of the outbreak, Roach said it was “ludicrous” to imagine that fiscal and monetary policy would be able to arrest the downside of physical measures taken to contain the spread of the epidemic.

“These measures are basically insensitive to policy action,” he said.

Instead, “what fiscal and monetary policy can do would be to attempt to stabilize markets — which is certainly important — but most importantly, to underwrite the upside of this subsequent recovery once economies like China and elsewhere go back to work. So they’re playing for the other side of the virus-related impacts, not the downside,” said Roach.

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Economy

S&P/TSX composite gains almost 100 points, U.S. stock markets also higher

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3 days ago

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September 13, 2024

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TORONTO – Strength in the base metal and technology sectors helped Canada’s main stock index gain almost 100 points on Friday, while U.S. stock markets also climbed higher.

The S&P/TSX composite index closed up 93.51 points at 23,568.65.

In New York, the Dow Jones industrial average was up 297.01 points at 41,393.78. The S&P 500 index was up 30.26 points at 5,626.02, while the Nasdaq composite was up 114.30 points at 17,683.98.

The Canadian dollar traded for 73.61 cents US compared with 73.58 cents US on Thursday.

The October crude oil contract was down 32 cents at US$68.65 per barrel and the October natural gas contract was down five cents at US$2.31 per mmBTU.

The December gold contract was up US$30.10 at US$2,610.70 an ounce and the December copper contract was up four cents US$4.24 a pound.

This report by The Canadian Press was first published Sept. 13, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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Economy

Statistics Canada reports wholesale sales higher in July

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3 days ago

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September 13, 2024

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OTTAWA – Statistics Canada says wholesale sales, excluding petroleum, petroleum products, and other hydrocarbons and excluding oilseed and grain, rose 0.4 per cent to $82.7 billion in July.

The increase came as sales in the miscellaneous subsector gained three per cent to reach $10.5 billion in July, helped by strength in the agriculture supplies industry group, which rose 9.2 per cent.

The food, beverage and tobacco subsector added 1.7 per cent to total $15 billion in July.

The personal and household goods subsector fell 2.5 per cent to $12.1 billion.

In volume terms, overall wholesale sales rose 0.5 per cent in July.

Statistics Canada started including oilseed and grain as well as the petroleum and petroleum products subsector as part of wholesale trade last year, but is excluding the data from monthly analysis until there is enough historical data.

This report by The Canadian Press was first published Sept. 13, 2024.

The Canadian Press. All rights reserved.

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Economy

S&P/TSX composite up more than 150 points, U.S. stock markets mixed

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4 days ago

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September 12, 2024

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TORONTO – Canada’s main stock index was up more than 150 points in late-morning trading, helped by strength in the base metal and energy sectors, while U.S. stock markets were mixed.

The S&P/TSX composite index was up 172.18 points at 23,383.35.

In New York, the Dow Jones industrial average was down 34.99 points at 40,826.72. The S&P 500 index was up 10.56 points at 5,564.69, while the Nasdaq composite was up 74.84 points at 17,470.37.

The Canadian dollar traded for 73.55 cents US compared with 73.59 cents US on Wednesday.

The October crude oil contract was up $2.00 at US$69.31 per barrel and the October natural gas contract was up five cents at US$2.32 per mmBTU.

The December gold contract was up US$40.00 at US$2,582.40 an ounce and the December copper contract was up six cents at US$4.20 a pound.

This report by The Canadian Press was first published Sept. 12, 2024.

Companies in this story: (TSX:GSPTSE, TSX:CADUSD)

The Canadian Press. All rights reserved.

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