The world has flu

The fear of a worldwide spread of the Chinese corona virus has the media and financial markets firmly in its grip. However, the rapid and vehement action of the Chinese government and the reactions now underway in the other affected countries should limit the risk of a global pandemic.

Of course, no one can rule out the possibility that the pathogen may mutate and develop unfavourably, but this risk is actually always present. If a serious pandemic were to occur, the economic consequences would certainly be very drastic, as it would hit the main nerve of the interconnected global economy.

The current and expected course of the coronavirus spread does not yet indicate that there will be lasting consequences for the real economy. Nevertheless, the leading economic indicators are likely to deteriorate in the coming weeks. The extent to which European companies will be affected depends above all on their exposure to the Chinese market. The major luxury goods manufacturers, for example, generate a large share of their sales in China. Airlines and hotel chains are also likely to be negatively affected.

All in all, uncertainty will certainly continue to rise initially. However, this should subside again in March at the latest, when the flu season slowly comes to an end. The currently high volatility on the financial markets should also end again by then at the latest.

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