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Will the Coronavirus Cause a Major Growth Slowdown in China?

Summary:
Some fear that the timing of China’s coronavirus outbreak – at the start of the country's week-long New Year celebration, and in the middle of traditional school-break travels – will exacerbate the economic fallout from the epidemic. But three important factors may limit the virus’s impact on Chinese and global GDP. NEW YORK – The panic generated by the new coronavirus, 2019-nCov, which originated in Wuhan, one of China’s largest cities and a major domestic transport hub, reminds many of the fear and uncertainty at the peak of the 2003 SARS crisis. China’s stock market, after rising for months, has reversed itself in recent days, and global markets have followed suit, apparently reflecting concerns about the epidemic’s impact on

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Some fear that the timing of China’s coronavirus outbreak – at the start of the country's week-long New Year celebration, and in the middle of traditional school-break travels – will exacerbate the economic fallout from the epidemic. But three important factors may limit the virus’s impact on Chinese and global GDP.

NEW YORK – The panic generated by the new coronavirus, 2019-nCov, which originated in Wuhan, one of China’s largest cities and a major domestic transport hub, reminds many of the fear and uncertainty at the peak of the 2003 SARS crisis. China’s stock market, after rising for months, has reversed itself in recent days, and global markets have followed suit, apparently reflecting concerns about the epidemic’s impact on the Chinese economy and global growth. Are these worries justified?

My baseline projection is that the coronavirus outbreak will get worse before it gets better, with infections and deaths possibly peaking in the second or third week of February. But I expect that both the Chinese authorities and the World Health Organization will declare the epidemic to be under control by early April.

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