FINANCE
How events impact on our local – and global – economy
Jillian Thomas (pictured), Managing Director of Chamber patron Future Life Wealth Management, looks at how our economy truly is global – and local.
Coronavirus continues to have an increasingly significant impact not just in China but around the world. As I write it has supposedly killed over 2,500 people in
China alone; although my sources tell me the number of cases is much higher. And even at this stage its effect is so much bigger than
the actual number of people infected. The impact is worldwide, on the movement of people and the movement of goods. There is cargo stuck in ports, on ships and planes around the world. China is involved in so much of the world’s trade, and if goods can’t get in or out, we could be facing all sorts of issues. If you think it takes up to 60 days for items to be shipped from China to
the UK, you can see that there could be shortages of goods to come; all those retailers expecting their new lines for the spring and summer; t- shirts, shorts and summer dresses from all those factories in China that may not actually arrive. And it is not just transport that is the issue, factories are closing down in
China, so the goods may not be being made in the first place. So, exporting and importing is being hit globally and all this upheaval is having an impact on stock markets around the world.
The FTSE has been influenced by the spread of the virus.
For example, the price of Brent Crude fell probably due to airlines being grounded, then bounced back with hopes of a
vaccine - the drug company shares also went up of course. The phenomenon of natural disasters or human issues
influencing stock markets is not new. For example, research has shown that big hurricanes can have an effect on the global
economy, with a reduction in GDP. Some commentators are saying the
coronavirus could lead to a one per cent reduction in worldwide GDP. Economies around the world respond to global events, but actually all
global events are local, somewhere; so maybe I should say all economies can be influenced by local events, no matter how far away. We are all truly linked together. No individual investment advice is given, nor intended to be given in this
article and no liability will be accepted in respect of any action you may take as a result of reading this article. If you are unsure you are urged to take independent investment advice.
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94 business network March 2020
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