IMF says too soon to quantify impact of coronavirus on China's economy

by Reuters
Thursday, 30 January 2020 16:34 GMT

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WASHINGTON, Jan 30 (Reuters) - The International Monetary Fund said on Thursday it is closely monitoring China's coronavirus outbreak, but it is too soon to quantify the potential economic impact there of the virus, which is halting tourism and commerce throughout the country.

IMF spokesman Gerry Rice told a regular news briefing that the direct impact on consumer and business demand had been most severe in Hubei Province, the outbreak's epicenter, and the extent of the impact depends on how quickly the virus subsides.

Rice added that China has enough fiscal space to support its economy though the crisis if necessary and ensure that households and businesses have access to credit.

"We've seen the direct impacts, mostly on demand as people have stayed home in China and what is usually a busy retail and tourism season has essentially come to a halt," Rice said. "At the same time, on the supply side, there have been production stoppages, transport delays and frictions and workers staying home."

Rice said the outbreak was having an indirect impact on market confidence and business uncertainty, which has hurt equity and bond markets elsewhere, with Chinese markets closed for the Lunar New Year holiday.

"How large the impact will be exactly is hard to tell at this point," Rice said, adding that so far it has been most severe in Hubei Province, which represents about 4.5% of Chinese economic output.

But transport restrictions could impact sales and economic activity throughout China, Rice said.

The IMF's assessment appeared cautious compared to those from some private economists and companies. One Chinese economist has estimated that China's growth would be reduced by as much as a percentage point this year. (Reporting by David Lawder Editing by Chizu Nomiyama and Jonathan Oatis)

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