Fears of global pandemic and recession

While Chinese officials are (prematurely?) claiming success in handling COVID-19, the rest of the world is beginning to look vulnerable. “Outside China, the outbreak has spread to about 29 countries and territories, with a death toll of about two dozen,” notes Reuters.

These include: 977 cases in South Korea, 280 in Italy, 95 in Iran, and new infections in Kuwait, Bahrain, Oman, Afghanistan, and Iraq (all in people who had been to Iran).

The U.S. now has 53 confirmed infections. On Friday, I asked: How would America handle a COVID-19 epidemic? My answer was, in brief, not very well. The Centers for Disease Control and Prevention (CDC) seems to agree:

In contradiction to statements from Donald Trump and National Economic Council Director Larry Kudlow that the virus is contained in the U.S., the CDC today warned that we can expect the virus to begin spreading “at a community level in the United States.” Nancy Messonnier, the director of CDC’s National Center for Immunization and Respiratory Diseases, elaborated:

“Disruption to everyday life might be severe,” Messonnier said, adding that she talked to her children about the issue Tuesday morning. “While I didn’t think they were at risk right now, we as a family ought to be preparing for significant disruption to our lives.”

“It’s not so much of a question of if this will happen anymore but rather more of a question of exactly when this will happen,” Dr. Nancy Messonnier, director of the National Center for Immunization and Respiratory Diseases, said in a news briefing.

U.S. financial markets are listening to the CDC, not the Trump administration, judging from today’s performance. From MarketWatch: Dow ends another 879 points lower, posting worst two day point drop on record.  

In Africa, too, markets are plunging. From the China-Africa Project’s daily newsletter: “We got a preview yesterday of what’s ahead for African financial markets when the Johannesburg Stock Exchange suffered one of its worst trading days in 20 years.”

Investors are spooked about South Africa’s massive exposure to the Chinese economy and are dumping shares in all those companies that depend on selling raw materials to Chinese industrial producers.

South Africa is by no means alone. Zimbabwe’s tourism industry is reeling, Guinea’s bauxite producers are now selling into the weakest market in three years and Nigeria’s Central Bank spending mightily out of the country’s forex reserves to make up for the sudden plunge in oil prices.

—Jeremy Goldkorn