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Coronavirus exposes fragile links of global economics

COVID-19 has spread quickly and swirled damage through our tightly entwined economy

It is a long way from Wuhan, China, to Fort McMurray or the suburban malls of Winnipeg but when one thread of the global economy breaks it is not long before the unravelling begins.

As we write this it has been five weeks since COVID-19, originally known as the novel coronavirus, exploded from a suspected seafood market in China’s industrial heartland.

Since then oil prices have fallen week-over-week with the benchmark WTI crude price tumbling below $50 a barrel and threatening to drop further if the virus is not contained. 

The world’s second-biggest economy is in lockdown with 90 per cent of its professional offices closed or working reduced hours. Factories, theatres and even events celebrating the Chinese New Year were shut down.

The virus has quarantined or restricted the movement of at least 60 million Chinese citizens, grounded airlines, frozen cruise ships, shut ports and crippled transportation on a global scale.

Winnipeg furniture dealer John Salgueiro shared the fear of retailers across the country. “Most things come from China,” he told CTV News. “Threads come from China, springs, just about 100 per cent of the springs in either mattresses or sofas come from China.”

In Vancouver, the virus is already affecting the real estate sector. Residential developers say real estate openings, particularly those that involve large gatherings and celebrations, are poorly attended. In fact, some new developments are delaying gatherings while waiting for the virus fears to subside.

Despite reports the spread of the virus is abating, it was killing an average of 10 people a day with 1,300 deaths worldwide as this was written. 

The impact on global travel and tourism can hardly be overestimated. An estimated 78 million Chinese residents travel abroad each year. Air Canada has halted all direct flights to China and the U.S. Australia, New Zealand and India are among countries refusing entry to all foreigners flying in from China’s mainland.

In a statement in early February, Pierre Talbot, director of the Neuroimmunovirology Laboratory at the Quebec-based National Institute of Scientific Research, said, “The individual risk for Canadians remains quite low. I think the epidemic will die out in the next few weeks.”

 But government leaders are warning the economic contagion could last much longer.

Speaking to a Calgary business meeting February 5, Finance Minister Bill Morneau suggested the virus outbreak could cause a dip of 0.4 per cent in global economic output in 2020.

“We need to keep that in the context of an economy, globally, that’s growing at around 3 per cent, so it’s a significant impact,” he said.

COVID-19 has exposed our vulnerable and fragile interdependence – and the need for all of us, everywhere, to work together.