Anxiety grips companies across the world as virus spreads
WASHINGTON (AP) —Since breaking out of China, the coronavirus has breached the walls of the Vatican. It’s struck the Iranian holy city of Qom and contaminated a nursing home in Seattle.
And around the world, it’s carrying not just sickness and death but also the anxiety and paralysis that can smother economic growth.
From Florida, where the CEO of a toy maker who can’t get products from Chinese factories is preparing layoffs, to Hong Kong, where the palatial Jumbo Kingdom restaurant is closed, businesses are struggling. The virus has grounded a British airline, and it’s sunk a Japanese cruise-ship company.
The cumulative damage is mounting.
The Organization for Economic Cooperation and Development this week slashed its forecast for global growth for this year to 2.4% from 2.9%. It warned that Japan and the 19 European countries that share the euro currency are in danger of recession. Italy may already be there.
When COVID-19 emerged in China a few weeks ago, many economists envisioned something like what happened when SARS hit China and Hong Kong in 2003: A short-lived interruption of Chinese economic growth, one that left the global economy largely unscathed.
Yet the new virus has spread far faster and more widely than expected. Between November 2002 and early August 2003, SARS infected 7,400 people in 32 countries and territories and killed 916. By contrast, COVID-19 has infected more than 100,000 people and killed more than 3,400 in 90 countries. And the toll is growing.
“This is not a China issue anymore,” said Jacob Kirkegaard, senior fellow at the Peterson Institute for International Economics.
Business travel in the United States has slowed sharply in the face of the outbreak. Numerous large companies, including Amazon and Google, are restricting non-essential travel. The result is a dire financial blow for the travel and tourism industries — from airlines and hotels and restaurants to cruise ship companies and conference centers.
Some airlines, including United, have cut back on flights both within the United States and internationally. The industry, already reeling from the grounding of Boeing’s 737 Max, stands to be severely damaged by the viral outbreak, especially if travelers stay away for months to come.
In Europe, Germany’s largest airline, Lufthansa, says it will cut up to 50% of its flights in the next few weeks, having suffered a drastic drop in reservations. The struggling British airline Flybe collapsed last week as the outbreak quashed ticket sales. Air France and Scandinavian Airlines are freezing hiring and offering unpaid leave and shorter work hours as they endure a drop in passengers and cargo.
The pullback in air travel has led to the cancellations of high-profile conferences, from the Geneva auto show to a global health conference in Orlando, Florida, to South by Southwest, the annual festival of music, film and technology in Austin, Texas. Those cancellations, in turn, are dealing financial setbacks to the cities that normally host them and count on the financial windfalls they bring.
Amusement parks are being hurt by the sudden reluctance of people to travel and mingle with crowds. Disney’s Shanghai Disneyland and Hong Kong Disneyland remain closed. Other theme park companies, like Six Flags and SeaWorld Entertainment, will likely suffer, too.
As more people stay home, some small pockets of the U.S. economy could benefit, including food delivery outfits, video conference companies and entertainment streaming services. Most of corporate America, though, is vulnerable, and earnings growth is likely weakening. Oxford Economics, noting the “darkening outlook,” puts the odds of a U.S. recession at 40%.
Last week, the Federal Reserve announced a surprise half-point cut in its key interest rate to try to aid the economy in the face of the coronavirus. The Fed is expected to cut rates further in coming weeks, though economists question whether that will do much to bolster investor or consumer confidence. Central banks in Australia, Canada, China and Japan have also acted to support their economies. The European Central Bank is expected to announce its next steps this week.
The virus and the measures meant to contain it have choked the supply chains that companies around the world had come to rely on. Chinese authorities locked down Wuhan, the industrial hub at the center of the outbreak, as well as surrounding cities. Stranded by travel restrictions, millions of migrant factory workers who had returned to their home villages for the Lunar New Year couldn’t get back to work.
THOUSANDS PREPARE TO GET OFF SHIP HIT BY VIRUS IN CALIFORNIA
Federal and state officials in California prepared to receive thousands of people Monday from a cruise ship that has been idling off the coast of San Francisco with at least 21 people aboard infected with the coronavirus.
Personnel covered head to toe in protective gear woke up passengers on the Grand Princess to check whether they were sick.
Michele Smith, of Paradise, California, said a doctor knocked on her and her husband’s cabin before dawn and asked if they had a fever or a cough. The couple who went on the cruise to celebrate their wedding anniversary are healthy and, like the rest of the 2,400 passengers aboard, have been isolating in their cabins since Thursday.
On land, fences were installed at an 11-acre site at the Port of Oakland as authorities readied flights and buses to whisk the passengers aboard the ship to military bases or their home countries for a 14-day quarantine. The more than 3,500 passengers and staff on the ship hail from 54 countries.
“We’re making every effort to get them off the ship as safely and quickly as possible,” said Dr. John Redd of the U.S. Department of Health and Human Services, who urged passengers to remain in their rooms.
As the U.S. death toll from the virus reached at least 21 and the number of cases worldwide soared above 110,000, California Gov. Gavin Newsom and the mayor of Oakland sought to reassure the public that none of the Grand Princess passengers would be exposed to the U.S. public before completing the quarantine. The number of infections in the United States climbed above 500 as testing for the virus increased.
The Port of Oakland was chosen for docking because of its proximity to an airport and a military base, Newsom said. U.S. passengers will be transported to military bases in California, Texas and Georgia, where they’ll be tested for the COVID-19 virus and quarantined.
About 1,100 crew on the ship, 19 of whom have tested positive for the new virus, will be quarantined and treated aboard the ship, which will dock elsewhere, Newsom said.
“That ship will turn around — and they are currently assessing appropriate places to bring that quarantined ship — but it will not be here in the San Francisco Bay,” he said.
Dr. Anthony Fauci, the National Institutes of Health’s infectious diseases chief, said Sunday that widespread closure of a city or region, as Italy has done, is “possible.” U.S. Surgeon General Jerome Adams said communities will need to start thinking about canceling large gatherings, closing schools and letting more employees work from home, as many companies have done in the Seattle, Washington, area amid an outbreak at a care home that has killed 17.
BEHIND THE SCENES, SCIENTISTS PREP FOR COVID-19 VACCINE TEST
Dozens of research groups around the world are racing to create a vaccine as COVID-19 cases continue to grow. Importantly, they’re pursuing different types of vaccines — shots developed from new technologies that not only are faster to make than traditional inoculations but might prove more potent. Some researchers even aim for temporary vaccines, such as shots that might guard people’s health a month or two at a time while longer-lasting protection is developed.
“Until we test them in humans we have absolutely no idea what the immune response will be,” cautioned vaccine expert Dr. Judith O’Donnell, infectious disease chief at Penn Presbyterian Medical Center. “Having a lot of different vaccines -- with a lot of different theories behind the science of generating immunity -- all on a parallel track really ultimately gives us the best chance of getting something successful.”
First-step testing in small numbers of young, healthy volunteers is set to start soon. There’s no chance participants could get infected from the shots, because they don’t contain the virus itself. The goal is purely to check that the vaccines show no worrisome side effects, setting the stage for larger tests of whether they protect.
First in line is the Kaiser Permanente Washington Health Research Institute in Seattle. It is preparing to test 45 volunteers with different doses of shots co-developed by NIH and Moderna Inc.
Next, Inovio Pharmaceuticals aims to begin safety tests of its vaccine candidate next month in a few dozen volunteers at the University of Pennsylvania and a testing center in Kansas City, Missouri, followed by a similar study in China and South Korea.
Even if initial safety tests go well, “you’re talking about a year to a year and a half” before any vaccine could be ready for widespread use, stressed Dr. Anthony Fauci, director of NIH’s National Institute of Allergy and Infectious Diseases.
That still would be a record-setting pace. But manufacturers know the wait -- required because it takes additional studies of thousands of people to tell if a vaccine truly protects and does no harm -- is hard for a frightened public.
“I can really genuinely understand everybody’s frustration and maybe even confusion,” said Kate Broderick, Inovio’s research and development chief. “You can do everything as fast as possible, but you can’t circumvent some of these vital processes.
AROUND THE PACIFIC
Pacific countries are introducing more Covid-19 restrictions, as the global outbreak continues.
New Caledonia's government has decided to cancel all school trips abroad because of the virus.
The measure was announced by the vice-rector, who said it had been taken as a precaution.
He asked both private and public schools to defer travel plans made for this year.
The government also extended the list of countries defined to be at risk of the virus to include, among others, France and Japan.
New Caledonia's main airlink to Europe is via Tokyo.
The list already included China, Singapore, South Korea, Italy and Iran.
Meanwhile, Fiji has also widened its travel restrictions to include foreign nationals who have been present anywhere in South Korea in the past 14 days.
Fiji's borders will be closed to all non-Fijians who have been present in mainland China, Italy, Iran or South Korea within 14 days of their intended arrival in Fiji.
Fijians are being advised to avoid non-essential travel to those countries.
(Source: RNZ Pacific)