I thought this was quite an interesting story on CNBC this morning. I see a lot of people look at the virus outbreak as something quite insignificant and associate it with its impact on China, but here is a good example of how second order effects can start to accumulate across the globe.
If I was asked to guess a number I’d have said something like 5% and the range of 30%-40% is quite shocking. Tourism is 8% of French GDP and this could have a substantial drag on the economy if things do not clear up in time for the European Summer season.
Even if things do clear up, I think that a lot of the Chinese population will have been effected in some way negatively from a financial perspective, either from loss of earnings, extra expenses or needing to support family/friends who have been directly impacted. This could mean a year with a lot less ‘overseas’ holidays so to speak as they recover from the unprecedented actions this outbreak has lead to.
With other countries like Italy starting to experience problems, it’s highly likely more stories like this follow and that could weigh on market sentiment for Europe, where decent economic growth has been a struggle at the best of times recently.
$FRA40 $China50 $FEZ $GER30
