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According to Morgan Stanley analysts, China’s economic growth in the first quarter could drop to 3.5% if the spread of the virus outbreak, believed to have originated in Wuhan, is not contained quickly.
So far, Chinese health authorities have reported 74,185 confirmed cases and over 2004 deaths, most concentrated in the Hubei province, the epicenter of the epidemic.
Production activities in China were halted during this period in an attempt by the authorities to contain the virus.
As factories have started coming back online, Morgan Stanley analysts have noticed that production has only reached 30-50% of last week’s normal levels.
Since China is the second-largest economy in the world, a slowdown in manufacturing activities in China is reflected and has consequences on a global level.
Morgan Stanley analysts said Chinese production could reach 60-80% of normal levels by the end of the month, and return to normal in mid-March. However, uncertainties remain regarding the spread of the virus.
Also according to Morgan Stanley’s report, industrial production could receive a strong push with the return to normal.
China and other Asian countries will take some economic measures, such as a further cut in the interest rate and tax exemptions for the sectors most affected, to try to reduce the impact of the epidemic.
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