The World Bank will revise its global growth forecast downwards due to the new coronavirus, the president of the multilateral lender said on Tuesday amid fears the epidemic in China will harm global supply chains.
The World Bank last month forecast a rebound in global growth this year after the easing of trade tensions between the US and China that had contributed to a decline in 2019.
But World Bank President David Malpass warned the virus that has killed hundreds in China and shuttered businesses and borders posed a threat to the prediction.
There will be a lowering of forecasts for at least the first part of 2020, in part due to the China, in part due to the supply chains, Malpass said.
A lot of Chinese goods come out to the rest of the world in the belly of aircrafts that are carrying passengers, Malpass said.
But as airlines worldwide have suspended flights to and from China and some of its neighbors have shut their borders you need to adjust the supply chains in order to get the goods out to make the products that the whole world economy is operating on, he said.
The World Bank economic outlook predicted the world economy would grow to 2.5% this year from 2.4% last year.
Malpass was discussing the economic outlook with Janet Yellen, former chair of the US Federal Reserve, who agreed the virus would take a bite out of growth.
The virus seems certain to have a significant effect at least for a quarter or two on China and given its economic heft, and that will surely hit the global economy, Yellen said.
The World Bank on Monday called for countries worldwide to strengthen their health surveillance and response systems, and said it was eyeing what resources and expertise it can contribute to fight the disease.
The virus has killed almost 500 people in China, exceeding the 349 death toll caused by the Severe Acute Respiratory Syndrome (SARS) outbreak of 2002-2003, which eventually killed nearly 800 globally.