Page 9 - Forbes - Asia (March 2020)

Sidelines
STRESS TEST SE
7

O ne cannot cover the business scene in Asia CTION
these days without highlighting the chal-
lenge presented by the outbreak of the coro-
navirus (officially Covid-19) for the region’s
entrepreneurs, companies, governments
and economies. Just one example: Hong Kong’s financial
secretary recently said the outbreak could deal a “tsunami-
scale blow” to the city’s economy.
The Covid-19 outbreak will also have a negative impact
on the global economy. The worst-hit areas are in and
around Wuhan, China, the source of the virus, but the im-
pact is being felt acutely across most of Asia—and indeed
the global economy.
JUSTIN DOEBELE
The most obvious industries being affected are airlines, EDITOR, FORBES ASIA
retail, F&B, hospitality and tourism. Insurance will no
doubt take a big hit from various claims. Then there’s the
stress put on the medical industry—a major problem is the
lack of a vaccine to help prevent its spread. Thankfully, the
mortality rate for Covid-19 is much lower than for SARS,
but it also seems more contagious. The outbreak highlights a truth about the emerging cen-
As many commentators have noted, the increasingly glo- trality of China. Given the greater role that China now plays
balized world, with its complex supply chains, trade routes in the global economy—in such areas as trade, technology
and air traffic, can enable the virus to spread as fast as it can and consumption—then what affects China will increas-
also move people, goods and services. Governments and ingly have a broader effect on everyone.
international organizations, for the most part, have been The old adage that health is wealth is never truer than
swift to implement measures to try to contain the spread of today. While some predicted China would produce another
the virus, building on lessons learned in previous episodes virus after the SARS crisis, the timing, severity and origin
with the H1N1 virus and other contagions. Companies have cannot be foreseen. Covid-19 is a stark reminder of the
installed business continuity plans, which typically include power of black swans, those unwelcome and, by definition,
steps such as more telecommuting, business travel restric- unexpected events that can have significant consequences.
tions and cancelling face-to-face meetings. Everywhere It is a global stress test, which one hopes the world can
people are taking precautions, such as elbow bumps in- soon pass. As always, any comments welcome at editor@
stead of handshakes, and avoiding crowded areas. forbesasia.com.
It is possible that the virus, similar to others before it,
will burn itself out in a few months. Yet even if there is a
return to normalcy by the summer, the global economy will
still need time to recover—companies will take a hit in their
first-half results, and governments will take one in growth
rates and tax revenues. EDITOR@FORBESASIA.COM

MAR CH 2020 F ORBES A SIA