Financial institutions have warned of the impact coronavirus could have on the global economy as clothing and footwear companies assess impact on supply chains, sales and revenue.

The Organisation for Economic Co-operation and Development (OECD) has described the virus, which is rapidly spreading around the world and has caused 3,000 deaths, as “the greatest danger since the financial crisis”.

Covid-19, the illness caused by the virus, is raising both health concerns and the risk of wider restrictions on the movement of people, goods and services, falls in business and consumer confidence and slowing production.

In its best-case scenario of limited outbreaks in countries outside China, a sharp slowdown in world growth is expected in the first half of 2020 as supply chains and commodities are hit, tourism drops and confidence falters. Global economic growth is seen falling to 2.4% for the whole year, compared to an already weak 2.9 % in 2019. It is then expected to rise to a modest 3.3% in 2021.

Growth prospects for China have been revised down sharply to below 5% this year after 6.1% in 2019.

But broader contagion could cut global growth to as low as 1.5% this year, halving the OECD’s previous 2020 projection from last November. Containment measures and loss of confidence would hit production and spending and drive some countries into recession, including Japan and the euro area.

OECD chief economist Laurence Boone said: “The virus risks giving a further blow to a global economy that was already weakened by trade and political tensions. Governments need to act immediately to contain the epidemic, support the health care system, protect people, shore up demand and provide a financial lifeline to households and businesses that are most affected.”

Source: Sports Textiles