Opinion

Inoculating economic growth against the coronavirus

Inoculating economic growth against the coronavirus

Author
Short Url

Alarm over the coronavirus continues to spread as cases skyrocket in Far East Asia, Iran and Italy, creating an economic contagion that may prove difficult to contain as well.

To dampen panic, the International Monetary Fund’s managing director Kristalina Georgieva said at the recent Global Women’s Forum in Dubai that her economic crystal ball was being clouded by the coronavirus, but that she was still hoping for a “V shaped” recovery from China — a pronounced drop followed by a quick return to growth. At the G20 summit in Riyadh just a week later, she struck a tone that was clearly less optimistic.

Prior to the coronavirus, China was pegged to grow 6 percent, its slowest pace in nearly three decades.

Phase 1 of the US-China trade agreement lifted a cloud of uncertainty over protectionism, but that 18-month dispute seems like a blip on the screen today based on a sky-high level of uncertainty. Georgieva said China could slow to 5.6 percent, which is already forcing is Asian neighbors from South Korea to Southeast Asia to act.

The Philippines cut interest rates, Singapore announced a $4.5 billion emergency financial package, South Korea described the situation as an emergency that will need funding and the ZEW economic institute in Germany said virus fears are undermining sentiment and that was before Italy was gripped by a sharp rise of infections.

One should not overlook that it was Asia, not the US, that’s been the real engine of global growth the last two decades. The gross domestic product growth of China speaks wonders about the interconnectedness of today’s economy. Back during the sars virus in 2003, China was a $1.6 trillion economy. In 2020, it is a $14 trillion giant that vacuumed up products from all of Asia. That is clearly under threat, as oil, coal, copper and other commodities remain under pressure. But the coronavirus in an era of globalization poses a much bigger threat to global supply chains — where one manufacturing hub, say in South Korea or Japan, is highly dependent on supplies from China.

There is no shortage of analysis on how this is already affecting technology, pharmaceutical and aerospace companies, but at the G20 meeting the first bout of protectionist realism bubbled to the surface. France’s finance minister Bruno Le Maire went so far as to suggest that the West has become too dependent on China and its low-cost, highly productive manufacturers. It is not national pride or protectionism, claimed Le Maire, but industrial logic that needs to be applied to future policy.

I remember covering the final GATT trade agreement under the Uruguay round in 1988 before the creation of the World Trade Organization. It was France that posed the biggest challenge to a successful trade deal due to fears of US cultural colonialism from Hollywood and the threat to Europe’s highly subsidized farming sector. Neither proved true, but the language itself does not bode well for a global rules based system.

The coronavirus in an era of globalization poses a much bigger threat to global supply chains — where one manufacturing hub, say in South Korea or Japan, is highly dependent on supplies from China.

John Defterios

But it was Japan that signaled the clear and present danger of the coronavirus to the health of global commerce. China and Japan continue to have strained political relations, but the second and third largest economies are glued together as never before. Japan’s finance minister Taro Aso said it would be a mistake to remain complacent and those who have fiscal space to support growth should do so. Germany immediately comes to mind with its trade surplus and growing dependency on exports to China and the rest of Asia. Japan has its own issues to contend with after the economy collapsed in the fourth quarter by more than 6 percent and with the coronavirus in the mix, a recession seems inevitable.

This emergency policy call to action may give new life to what has been a dormant institutional structure at the G20. The group now represents more than 80 percent of GDP, with a quarter of the group from Asia. During the global financial crisis over a decade ago, then British Prime Minister Gordon Brown revamped the G20 to put forth a coordinated stimulus package that was the right move at the right time to resuscitate growth.

We heard murmurings of the same at the G20 in Riyadh with Saudi Arabia holding the rotating president this year.

“We will enhance global risk monitoring, including of the recent outbreak of COVID-19. We stand ready to take further action to address these risks,” according to the final communique of the conference.

Host finance minister Mohammed Al-Jaadan of the Kingdom said countries are ready to pull the policy trigger if needed.

“We all agreed that all countries and states will be ready to intervene as needed to face these risks and it’ll be a multilateral intervention including the WHO (World Health Organization) to monitor these risks and use relevant policies as needed,” said Al-Jadaan. 

Despite that outlook, the G20 said that global economic growth is expected to pick up “modestly” this year and next. At this stage of the coronavirus threat, I would not bank on it.

• John Defterios is CNN Business emerging markets editor and anchor based in Abu Dhabi. Twitter: @JDefteriosCNN

Disclaimer: Views expressed by writers in this section are their own and do not necessarily reflect Arab News' point-of-view

Saudi Arabia suspends entry for Umrah pilgrimage over coronavirus fears

A police officer wears a face mask to prevent contracting coronavirus as Muslim pilgrims pray near the Kaaba in the Grand mosque in Makkah, Saudi Arabia on Feb. 27, 2020. (Reuters)
Short Url
Updated 28 February 2020

Saudi Arabia suspends entry for Umrah pilgrimage over coronavirus fears

  • Emirates will not allow Umrah pilgrims or tourists from nearly two dozen countries to fly to the Kingdom
  • Health ministry says no confirmed cases of coronavirus in the Kingdom

RIYADH: Saudi Arabia has placed a temporary ban on Umrah pilgrims in an attempt to ensure public safety by preventing the spread of the coronavirus.

Most foreign pilgrims often visit the Prophet’s Mosque in Madinah before or after the completion of their religious duties in Makkah, this has also been halted.

It is one of a number of precautionary restrictions announced early on Thursday as health authorities in the Kingdom closely monitor the spread of the virus. Tourist-visa holders from countries judged to pose a particularly high risk of spreading the virus will also be denied entry.

The Saudi health ministry said again on Thursday that there were ‘no known cases’ in the Kingdom.

Meanwhile, the Organization of Islamic Cooperation said it supports Saudi Arabia’s actions to protect pilgrims and visitors from coronavirus.

The Egyptian Dar Al-Iftaa also said Saudi Arabia’s decision to temporarily suspend Umrah visas over the coronavirus outbreak was in accordance with Sharia law.

The suspension of Umrah visas due to the coronavirus outbreak preserves the lives of pilgrims, it said.

Indonesia on Thusday said they asked the Kingdom to allow its citizens to continue their Umrah pilgrimage, with hundreds of pilgrims stranded at Jakarta airport following the temporary ban.

Later in the day, Dubai's Emirates said it would no longer carry to Saudi Arabia passengers with Umrah pilgrimage visas or tourists from nearly two dozen countries starting Thursday, until further notice.

In addition, Saudi nationals and citizens of Gulf Cooperation Council nations will not be able to use a national identity card to travel to and from the Kingdom for the time being. Exceptions to this shall be granted to Saudis returning home, and citizens of GCC countries who are in the Kingdom and want to return to their home countries, provided that they left or entered the Kingdom using a national identity card.

Health authorities at entry points will verify which countries travelers visited before arriving in Saudi Arabia and apply all necessary precautionary measures.

Saudi officials stressed that the restrictions are temporary and will be continuously reviewed by the health authorities. They reiterated the Kingdom’s support for and implementation of international efforts to limit the spread of the virus, and the Foreign Ministry urged citizens not to travel to the countries worst affected by the coronavirus.

Opinion

This section contains relevant reference points, placed in (Opinion field)

Nearly 7 million Umrah pilgrims visit the Kingdom each year, the majority of whom arrive at airports in Jeddah and Madinah.

Earlier, it emerged that seven Saudis are among the latest coronavirus cases in Bahrain and Kuwait. The Bahraini Ministry of Health on Wednesday said six Saudi women has tested positive for the virus.

They had arrived at Bahrain International Airport on a flight from Iran. The total number of confirmed cases in the country stands at 26. Studies at schools and universities have been suspended for two weeks in an effort to limit the spread of the virus.

Kuwait announced the first case of a Saudi citizen infected by the virus. The man, who had arrived in the country from the Iranian city of Mashhad, has been placed in quarantine for 14 days. There have been 26 confirmed cases of the virus to date in Kuwait.

The Saudi Ministry of Health has been providing neighboring Arab countries with advice and guidelines for controlling infectious diseases such as the coronavirus and dealing with health emergencies.

Dr. Hani bin Abdul Aziz Jokhdar, the deputy minister of public health, said that the guidelines were based on Saudi Arabia’s experience of protecting the health and well-being of pilgrims during Hajj season.

He led the Kingdom’s delegation at a meeting of the Executive Office of the Council of Arab Ministers for Health on Wednesday at the Arab League headquarters in Cairo.


Saudi forces intercept ballistic missiles over Riyadh and Jazan

Updated 29 March 2020

Saudi forces intercept ballistic missiles over Riyadh and Jazan

RIYADH: Saudi Arabia’s air defense forces shot down ballistic missiles toward Riyadh and the southern city of Jazan late on Saturday.

Col. Turki al-Maliki, spokesman for the Saudi-led Arab coalition helping Yemen's legitimate government, said the Royal Saudi Air Defense Forces intercepted and destroyed at 11:23 p.m. on Saturday two ballistic missiles over Riyadh.

At least one missile has also been intercepted over the southern city of Jazan, according to Al Arabiya sources.

Al-Maliki said the missiles were fired by the "Houthi terrorist militia" from Sanaa and Saada in Yemen toward civilian objects and civilians in the Kingdom.

Lt. Col. Mohammed Al Hammadi, media spokesperson for the Civil Defense in the Riyadh region, said two civilians from separate neighborhoods in the capital were injured by falling debris from the intercepted missiles as they exploded in mid-air.

There was no immediate claim of responsibility for the attack, but Yemen’s Iran-aligned Houthi terrorists have previously targeted Riyadh and other Saudi cities with missiles, rockets and drones.

Three explosions were heard in the curfew-locked capital before midnight amid efforts to curb the coronavirus pandemic, residents said on social media.

It was the first major assault on Saudi Arabia since the Houthis offered last September to halt attacks on the Kingdom after devastating twin strikes on Saudi oil installations.