While at the world forum meeting in Davos President Trump recalled the American economic preponderance and the success of its "America first" policies, a virus in the Chinese city of Wuhan It has been enough to remind us that we live in a global world. Our problems are common and the solutions have to be found in a coordinated way globally.
The economic consequences have not been long in coming. Stock markets with stratospheric valuations have passed into a volatile phase. On Monday, January 27, the nervousness caused the falls in all the bags. Dow Jones, Nasdaq and companies whose sales depend on China such as Apple, Caterpillar, Nvidia, Micron Technology, Nike or Estée Lauder fell to 3.9%. The iShares shares of the MSCI Emerging Markets ETF (EEM) 3.5%. Similarly, tourism-related industries should fall: airlines, hotels, luxury industry or the value of a barrel of oil. It remains to be seen what will happen when the Chinese markets open, closed for the New Year holidays.
On the macroeconomic level, it is important to keep in mind that China It has been and continues to be the largest contributor to global global growth. If we extrapolate what happened during SARS in 2002-2003 and, as then, this new pandemic continues, the forecast is that the Chinese economy will lose 1% of its annual growth with possible global slowdowns between 0.25 and 0.35. Although in similar episodes the economy and the markets recovered quickly, this time the high valuations mixed with the anxiety caused by a possible recession that experts have long announced as imminent could have the effect of a chronicle of a death foretold.
What other consequences can we expect? The US dollar, a refuge currency par excellence and that, once again forecast, was going to fall, can be recovered, just like gold. On the contrary, emerging currencies could fall, the yuan included, especially those that are traded without barriers such as Latin American or Southeast Asian.
The video where more than 50 cranes are seen on the outskirts of Wuhan preparing the land to build two hospitals with more than 1,000 beds in 10 days shows the Chinese capacity for large infrastructure projects, as evidenced by the five largest companies in the world The world's construction and engineering are Chinese. The country has not saved in the means it now has for its great economic power: creation of special committees and hundreds of military doctors are supporting the war against the disease.
While more than 30 million Chinese citizens are isolated, the virus reminds us that the world is one, pending China's information and effort to contain the disease. Hopefully, as for so many other global challenges, the coordinated action of all governments, civil society and multilateral organizations will win the battle. In times of ‘trumpism’ a virus gives us a lesson.
Lourdes Casanova She is a professor and director of the Institute of Emerging Markets, Cornell S.C. Johnson College of Business, Cornell University. Fellow of "la Caixa". This article has been prepared by the Public Agenda for El País.