This Black Swan event is going to have global economic consequences

Coronavirus has shut down more than two-thirds of the World’s second-largest economy

It was only a couple of weeks ago that I reviewed the global economic outlook by the IMF for 2020. The report showcased a cautiously optimistic approach for global growth noting that trade war risks, Brexit uncertainty, and underperformance in the emerging market economies could slow down the recovery. However, the one thing that no one can ever predict is the occurrence of Black Swan events.

While some of these events taper off earlier than the others, the recent outbreak of coronavirus, which has turned into a pandemic is already hurting the economic activity in China. The second-largest economy has literally been held hostage to this outbreak as it shows no signs of abating.

The new year had started off on an optimistic note with markets rebounding big time from the earlier summer lows. Phase 1 trade deal between the two the United States & China in January promised to bring normalcy to the markets & general investor sentiment. Then came the news of Coronavirus spreading out of the Chinese city of Wuhan (Hubei province). So far it 20,704 people have been infected, 427 have died while 727 have recovered.