While it’s too early to gauge the full economic fallout of the coronavirus outbreak, the OECD has already slashed its growth forecast for the world economy as the virus continues to spread outside of China. In its latest Interim Economic Assessment Report, the organization expects the impact of the COVID-19 outbreak to be severe, resulting in a 0.5 percentage point downward revision of its forecast for global GDP growth in 2020.
Unsurprisingly, the epicenter of the outbreak is expected to be heavily affected by the epidemic. The OECD slashed its growth forecast for China from 5.7 to 4.9 percent, citing restrictions on the movement of people, goods and services as well as containment measures such factory closures as drivers of a sharp decline in domestic demand and manufacturing output.
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China’s manufacturing sector tumbled in February, as many factories shut down in response to the coronavirus outbreak. According to the latest reading published by the National Bureau of Statistics on Saturday, the Manufacturing Purchasing Managers Index (PMI), a measure of factory activity across the country, plummeted to a record low of 35.7 percent in February, indicating a deep contraction.
