{"id":57958,"date":"2020-02-27T16:47:47","date_gmt":"2020-02-27T15:47:47","guid":{"rendered":"https:\/\/cms.munich-startup.net\/?p=57958"},"modified":"2022-02-28T13:39:56","modified_gmt":"2022-02-28T12:39:56","slug":"coronavirus-economy","status":"publish","type":"post","link":"https:\/\/cms.munich-startup.net\/en\/57958\/coronavirus-economy\/","title":{"rendered":"The impact of the coronavirus on the economy"},"content":{"rendered":"
\n

The coronavirus outbreak in China and its spread to other countries is having increasingly significant economic impacts: Not only are Chinese factories shut down, but global companies like Apple and Microsoft are also revising their sales forecasts. Adidas, Hugo Boss, and others are also reporting coronavirus-related losses. The IMF has therefore revised its growth forecast for the global economy downward, as has KfW for the German economy.<\/strong><\/p>\n\n\n\n

The case Apple<\/a> illustrates how global companies are affected by the virus epidemic. In order to reduce the risk of infection and thus the further spread of the virus, the Chinese New Year holidays were extended \u2013 even outside the affected province of Hubei. As a result, factories belonging to Apple manufacturers Foxconn and Pegatron, as well as those of key suppliers, remain closed, even though they are actually located in other provinces. This means that Apple cannot produce and sell as many iPhones as planned. For the same reason, many stores \u2013 including the company's own stores \u2013 were temporarily closed, which further negatively impacted Apple product sales. Apple's share price fell significantly in the days following the withdrawal of the sales forecast, in some cases by more than 10 percent. Microsoft<\/a> had to issue a sales warning for its Windows division.<\/p>\n\n\n\n

The problem with supply chains<\/h2>\n\n\n\n

These measures affect virtually all companies that rely on suppliers from China, but especially car manufacturers, as their supply chains are extremely complex. Large suppliers themselves have numerous suppliers of their own who also rely on other companies. S\u00fcddeutsche Zeitung<\/a> For example, Daimler states that the company works with 213 suppliers. However, the ten largest companies alone receive parts from 588 suppliers, who in turn purchase from more than 2,900 other subcontractors.<\/p>\n\n\n\n

Of course, industries that have not only parts but entire products manufactured in China are also affected. The fashion industry, in particular, produces a large portion of its goods in Asia; at Adidas, this is around 20 percent of shoes and clothing, and at Primark, even 40 percent. If deliveries are interrupted, this is clearly noticeable in sales. In addition, brands are experiencing significant losses in the Chinese market due to the situation: Adidas and Hugo Boss, for example, have closed a large number of their own stores. Under Armour, in turn, estimates its corona-related loss in February and March at up to 60 million US dollars, according to the Sales management<\/a>.<\/p>\n\n\n\n

The standstill of the Chinese economy caused by the coronavirus has prompted Beijing to relax protective measures, at least in part, at the beginning of February. This depends mainly on the region: The Daily News<\/a>For example, the Tesla electric car manufacturer's plant in Shanghai was allowed to restart production, while Foxconn's facilities in Shenzhen, southern China, are still shut down. Since a container ship, for example, takes about a month to travel from Hong Kong to Hamburg, the impact on supply chains is only now slowly becoming noticeable in Europe.<\/p>\n\n\n\n

Concerns in the German ICT industry<\/h2>\n\n\n\n

According to a non-representative Bitkom<\/a>According to a mid-February survey of the ICT sector, many German companies fear losses due to the virus epidemic. One in four companies (25 percent) expects negative effects on their own business results in 2020, and one in two (54 percent) sees significant economic risks for the German economy. Furthermore, 50 percent expect the crisis surrounding the epidemic and its associated consequences to escalate further. Three in ten (29 percent) expect the coronavirus to plunge the global economy into recession. The same number see the digital sector as being severely affected by the coronavirus.<\/p>\n\n\n\n

One in three of the companies participating in the survey (35 percent) has business relationships with suppliers and partners, one in four (23 percent) customers, and one in eight (13 percent) branches in China. With monthly imports averaging more than \u20ac2 billion, China is by far Germany's most important trading partner for IT and telecommunications products, according to Bitkom. At the same time, exports to China average around \u20ac150 million per month.<\/p>\n\n\n\n

The spread of the coronavirus is also impacting the economy by leading to restrictions in many companies. Three in ten (30 percent) have completely stopped or at least restricted employee travel to China. One in three (34 percent) no longer allows their employees to participate in major events such as trade fairs or only to a limited extent. Some trade fairs, such as the Mobile World Congress in Barcelona, have even been canceled entirely. One in five companies (19 percent) has general travel restrictions in place. One in four (23 percent) receives hardly any or no supplies from China. Five percent have completely stopped or restricted supplies from other third countries. One in six (16 percent) has restricted production, and 3 percent have even stopped production completely.<\/p>\n\n\n\n

Impact of the coronavirus on the German economy<\/h2>\n\n\n\n

According to the German and European Chambers of Commerce in China, almost 90 percent of companies are now complaining of "moderate to severe effects" from the lung disease. The two chambers found this in a joint survey of their members. Half of them must now adjust their business goals and expect a double-digit decline in the first half of the year. A quarter of the companies even anticipate a decline of more than 20 percent. 54 percent of the companies surveyed report that demand has collapsed. 46 percent complain about supply bottlenecks.<\/p>\n\n\n\n

"The coronavirus epidemic is a stress test for the economy, which some supply chains with a strong focus on China are currently failing. The effects of the virus are clearly noticeable in the global economy and export-oriented German industry. The more than 5,000 German companies in China are currently severely restricted in procurement, production, and sales,"<\/p><\/blockquote>\n\n\n\n

says BDI General Manager Joachim Lang<\/strong>.<\/p>\n\n\n\n

Due to the coronavirus outbreak, the KfW<\/a> For the entire German economy, stagnation will continue in the first half of the year. A noticeable increase in quarterly growth rates is not expected until the summer. As a result, KfW Research expects GDP growth of only 0.8 percent for 2020 as a whole (previous forecast: +0.9 percent). KfW Research bases this on the assumption that the coronavirus epidemic will remain primarily confined to China and subside in a few weeks. After that, the Chinese economy should return to normal relatively quickly before massive disruptions occur in global value chains. However, the downside risks due to the new virus are considerable, warns Fritzi K\u00f6hler-Geib<\/strong>, Chief Economist of KfW:<\/p>\n\n\n\n

"If the coronavirus epidemic persists and also affects other regions of the world more severely, serious impacts on foreign trade and value chains, to which German industry is particularly exposed, will become more likely. The situation in Italy therefore worries me." <\/p><\/blockquote>\n\n\n\n

International impact<\/h2>\n\n\n\n

The International Monetary Fund (IMF) has also responded to the outbreak and adjusted its outlook: Instead of the 3.3 percent global economic growth previously expected for 2020, the fund now expects only 3.2 percent. It also assumes that the Chinese economy will be able to return to normal in the second quarter.<\/p>\n<\/div>","protected":false},"excerpt":{"rendered":"

The coronavirus outbreak in China and its spread to other countries is having an increasingly significant impact on the economy: Not only are Chinese factories at a standstill, but global companies like Apple and Microsoft are also revising their sales forecasts. Adidas, Hugo Boss, and others are also reporting coronavirus-related losses. The IMF has therefore\u2026<\/p>","protected":false},"author":33,"featured_media":57961,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5634,1],"tags":[157,1289],"acf":[],"yoast_head":"\nDie Auswirkung des Coronavirus auf die Wirtschaft - Munich Startup<\/title>\n<meta name=\"description\" content=\"Der Ausbruch des Coronavirus in China und dessen Ausbreitung in weitere Staaten hat Auswirkungen auf die internationale und deutsche Wirtschaft.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/cms.munich-startup.net\/en\/57958\/coronavirus-economy\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Die Auswirkung des Coronavirus auf die Wirtschaft - Munich Startup\" \/>\n<meta property=\"og:description\" content=\"Der Ausbruch des Coronavirus in China und dessen Ausbreitung in weitere Staaten hat Auswirkungen auf die internationale und deutsche Wirtschaft.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/cms.munich-startup.net\/en\/57958\/coronavirus-economy\/\" \/>\n<meta property=\"og:site_name\" content=\"Munich Startup\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/munichstartup\/\" \/>\n<meta property=\"article:published_time\" content=\"2020-02-27T15:47:47+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2022-02-28T12:39:56+00:00\" \/>\n<meta name=\"author\" content=\"Maximilian Feigl\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:creator\" content=\"@munich_startup\" \/>\n<meta name=\"twitter:site\" content=\"@munich_startup\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"Maximilian Feigl\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"5 minutes\" \/>\n<script type=\"application\/ld+json\" class=\"yoast-schema-graph\">{\"@context\":\"https:\/\/schema.org\",\"@graph\":[{\"@type\":\"WebPage\",\"@id\":\"https:\/\/cms.munich-startup.net\/57958\/coronavirus-wirtschaft\/\",\"url\":\"https:\/\/cms.munich-startup.net\/57958\/coronavirus-wirtschaft\/\",\"name\":\"Die Auswirkung des Coronavirus auf die Wirtschaft - 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