Goldman Sachs warns Wuhan coronavirus will hit US economic growth this quarter
- Goldman Sachs predicts Wuhan coronavirus will cut US economic growth by 0.4 percentage points this quarter.
- The bank's economists warned growth would suffer from declines in Chinese tourism to the US and American exports to China.
- However, they expect a second-quarter rebound to minimise the impact on annual growth.
- Wuhan coronavirus has infected nearly 10,000 people, killed 213 people, and spread to at least 20 countries.
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Goldman Sachs warned on Friday that Wuhan coronavirus is likely to hit US economic growth.
The banking titan's chief economist, Jan Hatzius, and his team predicted the fast-spreading virus would slow US growth by 0.4 percentage points this quarter. Goldman's previous growth forecast for the quarter was 2%.
The analysts also cautioned the economy could be hit harder if news coverage of the virus discourages people from travelling, commuting, and shopping, or worsens financial conditions for a prolonged period.
Wuhan coronavirus has infected nearly 10,000 people, killed 213 people, and spread to at least 20 countries including the US, UK, India, Canada, and Australia. The World Health Organization declared the flu-like illness a global emergency on Thursday.
Hatzius and his team based their lower growth forecast on a decline in Chinese tourists and a fall in American exports to China. Chinese arrivals to the US plunged by about 50% during the SARS outbreak in 2002 and 2003, they said.
Since then, Chinese travel and tourism have become more important to the US economy - they now generate 0.16% of US GDP. Exports of US goods to China - which have felt the pain of President Donald Trump's ongoing trade war with China - account for 0.6% of national GDP.
On the plus side, Goldman expects a rebound in US economic activity to boost second-quarter growth by 0.3 to 0.4 percentage points, limiting the drag on full-year growth to about 0.05 percentage points.
