Coronavirus and its impact on growth, markets, health has dominated the headlines. This week saw the
PMI numbers come in weak across board for Asia and outside as well, which led to a sharp decline in asset classes but there is a hope of a global coordinated central bank stimulus coming in at today's meeting. Ahead of that, we have seen some value buying on lower levels and the markets have been oversold.
However, to know what really lies ahead for us in the terms of growth numbers, CNBC-TV18 spoke with Rajiv Biswas of IHS Markit.
He said, “Our China survey of PMI manufacturing was at a historic low - lowest since 2004. When the survey in China began this was very much due to the closure of the industry in China for half of February, so obviously that would have a very big negative impact on the PMI survey results. When we do the survey in March, it will be better because it will be a four months operations even though it may not be as high as normal, it will still be a lot better than February."
"So for China with the cases of
Coronavirus that occur day to day also slowing down, this situation may be bottoming out now and their industrial production should improve even though it is too early to say if it would be strong," he said.
"However, the situation for the rest of the world is very different because we saw big escalation in cases in South Korea, Italy, Iran and the fear is this could spread too many other countries. So, possibly China may be bottoming out, but the rest of the world unfortunately may be getting into a worse situation in the coming weeks ahead,” said Biswas.
He said, “It still very difficult times and we have cut our global growth forecast for 2020 from 2.5 percent to 2 percent, so it is a half a percent cut in our expectations for global growth and that includes cuts for China, South Korea, Japan and many other Asia Pacific countries that are being affected by downturn in commodities, weaker tourism so it is still difficult situation in the near term.”
When asked about Indian markets he said, “India needs to be really cautious because at the moment one of the favourable things for India is that it hasn’t had as many cases of Coronavirus, just a handful of confirmed cases. However, what we are seeing is that sudden spreading the number of cases accelerating outside of China in the last two weeks. So, it is too early to say that India wouldn’t be affected and much will depend on whether India can contain the spread within India of such cases. Otherwise, the fundamentals are good and reflects that the economy is improving.”
However, the coronavirus shock would affect consumption and possibly industrial production, he said, adding that we need to see for the next month whether India can keep the cases low, he said."Before the epidemic started to escalate in January, we had expected that Indian growth momentum would improve through course of this year and would strengthen further in 2021 but now situation is different," said Biswas.