How the coronavirus hits the world economy

How the coronavirus hits the world economy

A few weeks ago we first took a look at how a bat (possible origin of the coronavirus) could have a butterfly effect on the world economy.

China accounts for about a fifth of global economic output, a third of global oil imports, and the largest share of global exports. That means that any time the Chinese economy shudders or stumbles, the shockwaves circle the globe. And China is most certainly shuddering.


So far, the country has seen more than 70,000 cases of coronavirus, with close to 2,000 deaths. Some 720 million people there are on residential lockdowns to stop its spread. That means people aren't out buying things or producing things in factories and offices.

This matters because:

China is a leading market for the world's largest consumer goods companies. The quarantine and lockdown restrictions have forced many of those businesses to go dark in China for now. Apple, for example, earlier this month closed all its stores in China, its second largest market. Starbucks, similarly dependent, has closed half its shops in the country. Estee Lauder's numbers are getting smudged and Haagen-Dazs sales are melting. Here's a look at what a few dozen of the world's leading consumer and services companies are saying.

China's oil imports, the largest in the world, are taking a hit as the virus crimps travel and industrial production there, knocking down China's oil purchases by several hundred thousand barrels per day. This is bad news for countries that depend on oil exports, like Nigeria, Africa's largest producer, where growth forecasts are already being trimmed.

China is the world's largest exporter, and with many of the country's major factories partly or totally shuttered, global businesses that rely on parts and labor in China are scrambling to figure out alternatives. DHL, who know a thing or two about supply chains, warned earlier this month of "serious disruptions." More than 30 scheduled shipping services from China to Europe and the US have been cancelled. This affects everything from your smartphone, to your vacuum cleaner to your (or your kids') video game consoles. The resourceful folks of Jaguar Land Rover say they are getting critical parts out of China in suitcases.

The good news is, after it gets worse, it generally gets better – when China's stores, factories, and travel links reopen, there will likely be a mini boom as everyone gets back to shopping and working and exporting. The bad news is: we still don't know when that might be, and with the number of cases still rising, it could be a while.

Walmart aspires to become a regenerative company – helping to renew people and planet through our business. We are committed to working towards zero emissions across our global operations by 2040. So far, more than 36% of our global electricity is powered through renewable sources. And through Project Gigaton, we have partnered with suppliers to avoid over 416 million metric tons of CO2e since 2017. Read more about our commitment to the planet in our 2021 ESG report.

Political division, disinformation and, frankly, stupidity are costing lives. It is not authoritarian to mandate vaccines in America. In fact, there is historical precedent. Making vaccine uptake a requirement will save tens of thousands of lives and maybe many more than that. There really aren't two sides to this argument, there is just the science.

Ian Bremmer's Quick Take:

Hi, everybody. Ian Bremmer here. Hope you're having a good week. I wanted to kick it off by talking about vaccines. We all know the recent spike in cases and even hospitalizations that we have experienced in this country over the past couple of weeks. It looks like that's going to continue. It is overwhelmingly because of Delta variant. The hospitalizations and deaths are overwhelmingly because too many people are un-vaccinated.

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Iraqi PM's face-to-face with Biden: Mustafa al-Kadhimi, Iraq's prime minister, met with President Biden at the White House Monday to discuss the future of US troops in Iraq. The US still has about 2,500 troops stationed in Iraq to engage in "counterterrorism" operations and train Iraqi forces. In an interview published this week, al-Kadhimi called for the withdrawal of all US combat troops, because, he said, Iraqi forces have proven capable of fighting ISIS militants on their own. (Just last week, some 30 Iraqis were killed when ISIS militants attacked a busy Baghdad market.) Al-Kadhimi still wants non-combat US troops to stay on in a training capacity. He became PM in 2020 as a consensus candidate after nationwide protests over corruption and joblessness forced the resignation of the unpopular previous government. At least 500 protesters were killed during a crackdown by Iraqi security forces, fueling demands for fresh elections, which are set to take place this October. The green PM has a tough job: he has to juggle relations with the Biden administration, which just pledged $155 million in aid to Iraq, and ties with Tehran, an influential player in Iraqi politics. (Iraq relies on Iran for energy imports, and Iran-backed militias inside Iraq are a force to be reckoned with.) Local sentiment has soured on the US presence as Iraqis resent being caught in the middle of US-Iran fights inside Iraqi territory.

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7,100: As a third COVID wave ravages Myanmar, the death toll has now risen above 7,100, a gross undercount because that total includes only those who died in hospitals. Myanmar, which has one of the weakest healthcare systems in Asia, is also dealing with a vaccine hesitancy problem: people are rejecting shots because they see vaccination as validation of the military, which overthrew the democratically elected government earlier this year.

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Tunisia, the only country that emerged a democracy from the Arab Spring, is now in the middle of its worst political crisis since it got rid of former autocrat Zine El Abidine Ben Ali over a decade ago.

On Sunday, the 64th anniversary of the country's independence from France, President Kais Saied responded to widespread protests over the ailing economy and COVID by firing embattled Prime Minister Hichem Mechichi and suspending parliament for 30 days. Troops have surrounded the legislature, where rival crowds faced off on Monday, with one side chanting in support of the move and the other denouncing it as a coup.

How did we get here, do we even know who's really in charge, and what might come next?

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This time last year, world health experts were speculating about why Africa appeared to have escaped the worst of the global pandemic. Younger populations? Natural immunity created by exposure to past viruses? Something else?

They can stop wondering. Africa is now in the grip of a COVID emergency.

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"We've been dealing with pandemics from the earliest recorded history. Thucydides writes about a pandemic in the history of the Peloponnesian War. So the last thing 2020 was, was unprecedented," Stanford historian Niall Ferguson told Ian Bremmer on GZERO World. Ferguson, whose new book, "Doom: The Politics of Catastrophe," believes that the world should have been better prepared for the COVID-19 pandemic based on the numerous health crises of the 20th century, from the 1918 Spanish flu to influenza and HIV/AIDS. He provides perspective on how the COVID crisis stacks up compared to other pandemics throughout history.

Watch the episode: Predictable disaster and the surprising history of shocks

COVID-19 was a global catastrophe that blindsided the world's wealthiest nations, and it's far from over. But as disasters go, it was hardly unprecedented. Humanity has a long history of failing to prepare for the worst, from volcanic eruptions to earthquakes to famines to shipwrecks to airplane crashes to financial depressions. But how do we get better at preventing such calamities from happening, and how many seemingly unavoidable "natural" disasters are actually caused by humans? On GZERO World, Ian Bremmer talks about all that and more with Stanford historian Niall Ferguson, who is just out with the perfect book for the topic, "Doom: The Politics of Catastrophe." Plus, a look at how one young Ugandan activist was literally cropped out of the global climate fight.

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GZERO World with Ian Bremmer. Watch episodes now

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GZERO World with Ian Bremmer. Watch episodes now

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Subscribe to GZERO Media's newsletter: Signal