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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.

Carbon has a bad rep, but did you know it's a building block of life? As atoms evolved, carbon trapped in CO2 was freed, giving way to the creation of complex molecules that use photosynthesis to convert carbon to food. Soon after, plants, herbivores, and carnivores began populating the earth and the cycle of life began.

Learn more about how carbon created life on Earth in the second episode of Eni's Story of CO2 series.

As we enter the homestretch of the US presidential election — which is set to be the most contentious, and possibly contested, in generations — Americans are also voting on 35 seats up for grabs in a battle for the control of the Senate. The 100-member body is currently held 53-47 by the Republican Party, but many individual races are wide open, and the Democrats are confident they can flip the upper chamber of Congress.

Either way, the result will have a profound impact not only on domestic policy, but also on US foreign relations and other issues with global reach. Here are a few areas where what US senators decide reverberates well beyond American shores.

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On September 23, GZERO Media — in partnership with Microsoft and Eurasia Group — gathered global experts to discuss global recovery from the coronavirus pandemic in a livestream panel. Our panel for the discussion Crisis Response & Recovery: Reimagining while Rebuilding, included:

  • Brad Smith, President, Microsoft
  • Ian Bremmer, President and Founder, Eurasia Group & GZERO Media
  • Jeh Johnson, Partner, Paul, Weiss, Rifkind, Wharton & Garrison, LLP and former Secretary of Homeland Security.
  • John Frank, Vice President, UN Affairs at Microsoft
  • Susan Glasser, staff writer and Washington columnist, The New Yorker (moderator)

Special appearances by UN Secretary-General António Guterres, European Central Bank chief Christine Lagarde, and comedian/host Trevor Noah.

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Jon Lieber, who leads Eurasia Group's coverage of political and policy developments in Washington, offers insights on the Supreme Court vacancy:

Will Senate Republicans, who stopped a Supreme Court nomination in 2016, because it was too close to an election, pay a political price for the change in tactics this time around?

Not only do I think they won't pay a political price, I think in many cases, they're going to benefit. Changing the balance of power on the Supreme Court has been a career-long quest for many conservatives and many Republicans. And that's why you've seen so many of them fall in line behind the President's nomination before we even know who it is.

At this point, do Senate Democrats have any hope of stopping President Trump from filling the ninth seat on the Supreme Court?

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In a special GZERO Media livestream on global response and recovery amid the COVID-19 pandemic, Eurasia Group & GZERO Media president Ian Bremmer discussed the difference between Europe's unified approach to economic stimulus and the deeply divided and political nature of the current conversation in the US. While initial stimulus support was bipartisan, there is little chance of Democrats and Republicans coming together again ahead of the November 3 presidential election. "It's red state versus blue state. President Trump's saying that coronavirus isn't so bad if you take the blue states out. He's president of the blue states, you can't take the blue states out," Bremmer told moderator Susan Glasser of The New Yorker.

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Panel: How will the world recover from COVID-19?

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