Contagious zone

• The outbreak of the coronavirus in China is a major issue for the Chinese economy. Some lessons from the SARS can still be extrapolated, like the behavior of the main operators, but the global macroeconomic backdrop is very different from 2003.
• Despite the important paralysis of the Chinese economy, we have only revised our 2020 growth forecast to 5.5% from 5.7%, as we expect a stimulus plan to offset this crisis, once the epidemic has been contained. We also reduce our growth forecast in Europe for full year 2020 by 0.1% to 0.7%.
• The most impacted sectors have already been hospitality, infrastructure (including transport) and raw materials, and we detail thereafter the exposures and challenges in those sectors. The temporary shutdown of the production of many industries in Wuhan have reduced raw materials’ needs leading to a sharp drop in metals and oil prices. Wuhan is a major logistic hub with immobile trains and grounded planes, generating serious disruptions in other regions, but also in other countries.
• The extent of the impact remains unknown. It will most certainly be stronger than in 2003 with a Chinese economy weighing 19% of the world economy and mainly dependent on consumption. If the shock will be temporary and followed by a strong rebound, the impacts on sectors and countries will nevertheless be very different.

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