The coronavirus outbreak is affecting imports and exports from China. Photo / AP
The coronavirus outbreak is affecting imports and exports from China. Photo / AP
Opinion by Liam Dann
Liam Dann, Business Editor at Large for New Zealand’s Herald, works as a writer, columnist, radio commentator and as a presenter and producer of videos and podcasts.
But the best scientists at the World Health Organisation can't predict what happens next so I'd take media pundits with a big grain of salt.
This is a unique phenomenon now.
Past outbreaks like Sars and H1N1 can provide a rough guide to how markets react but, even if the virus was the same (and it's not) the world is a difference place now.
Sometimes there is comfort to be found by digging into the statistics.
If you are under 50, female and don't suffer any chronic respitory conditions then the mortality rates look much better than the often quoted 2 per cent average.
But then if you are an older male smoker it doesn't really pay to look too closely.
It's encouraging that the number of active cases has been falling for the last week and the recovery rate rising.
That suggests things may have peaked in Wuhan.
A woman in a face mask walks across an empty intersection in Wuhan in central China's Hubei Province. Photo / AP
But that's after more than two months, thousands of deaths and a draconian quarantine regime that would be very hard to impose in a liberal democracy.
So the prospect that the outbreak has peaked at the epicentre doesn't offer much comfort while hotspots remain in Japan, South Korea and Italy.
Another uncontrolled outbreak outside of Hubei would extend economic disruption by weeks or months – blowing out the forecasts of economists and making a recession much more likely.
Economists have already quietly moved their base case scenarios from a "first quarter of the year" shock to a "first half of the year" shock.
There are still grounds to think there might be a strong v-shaped recovery.
We can take heart that this is not a banking crisis and credit markets are still functioning.
That creates scope for propping up business and consumer demand to maintain economic momentum.
But there are also issues with the supply side of the economy due China's production shut down.
Businesses all over the world will be running short of parts and components, which threatens their ability to keep operating.
In New Zealand an extended period of disruption sets up a test of relative strength for two distinct ends of our economy.
In one corner we have the New Zealand residential property market sector weighing in at a massive $1 trillion and driving the wealth effect which had the economy on a consumer-led roll heading into this year.