Monash Business School lecturer Dr Giovanni Di Lieto says the coronavirus outbreak “is going to have major, long-term consequences in terms of growth plans and the global economy over the next year”. The increasing spread of COVID-19 coronavirus outside mainland China has sparked fears of the disease itself but also of the lasting impact it will have on global economies.
Mr Di Lieto told Sky News people are equating the impact of COVID-19 to that of the deadly SARS outbreak but “it is important to remember China only accounted for four percent of global GDP in 2003 and now China is at 20 percent”.
He said “you can see how this can pan out in terms of the global repercussions of the crisis”.
“Global supply chains or major corporations work on a just-in-time mode which means that global multinationals tend to have very low stocks of anything that is required for a complex supply chain” he said.
“This means we have a very limited time span in which production can be halted or reduced, until then we start to have shortages of key components for producing nearly everything.
“I think we will feel the impact of this crisis way beyond when the virus will be extinguished in the next few months.”
Image: AP
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