The global spread of new coronavirus infections is a threat to the economy. Major countries must share a sense of crisis and take all possible measures to respond to the situation.

Finance ministers and central bank governors of the 20 major economies adopted a joint statement in which they vowed to employ all policy measures to prepare for a possible economic slowdown at the conclusion of their recent meeting in Saudi Arabia.

The communique states that G20 members “will enhance global risk monitoring, including of the recent outbreak of COVID-19,” using the recently adopted name for the new coronavirus. “We stand ready to take further action to address these risks.”

Members will support their domestic economies through fiscal and financial measures, depending on the circumstances in each country. The G20’s confirmation of this policy is significant. It is important for G20 members to deepen cooperation through such means as exchanging information while also exploring appropriate policy measures.

China, the epicenter of the outbreak of the new type of pneumonia, accounts for nearly 20% of the world’s gross domestic product, and many major companies have production bases for such products as automobiles and smartphones in the country. While some plants have resumed operations, full-scale production is a long way away.

If the stagnation in the country’s production continues for an extended period, downside pressure on its economy will surely increase.

Japan, Germany and other Asian countries, in particular, will be hit hard as they have large volumes of trade with China. Growth in Japan and Germany, among other nations, has already slowed, and many major companies have been facing worsening business performance. There is no doubt that the coronavirus outbreak will deliver an additional blow.

While speeding up efforts to secure alternative production bases outside China, companies should reexamine their parts supply chains and use this outbreak as an opportunity to end their excessive dependence on the country.

Negative growth likely

The International Monetary Fund lowered its forecast for China’s economic growth for 2020 by 0.4 percentage points from the 6% forecast in January in an announcement that coincided with the G20 meeting. It would be the first time for growth to fall below 6% since 1990 if the forecast is correct. The IMF also revised down the world’s economic growth by 0.1 percentage point from 3.3%.

The estimates are based on an assumption that the Chinese economy will return to normal at an early date, but there is no reason to be optimistic. Stock markets plunged worldwide on Monday, an apparent sign that investors are concerned about future developments.

In China, more than 300 million workers and students are expected to return to urban areas from their hometowns after the Lunar New Year break. These movements could spur a further spread of the virus.

The Japanese economy is likely to face a difficult situation for the time being. The number of Chinese visitors to the nation has nosedived, while many organizers are voluntarily canceling events. A second consecutive quarter of negative growth in January-March would not be surprising.

The Bank of Japan’s policy options are becoming limited. The government should steadily implement emergency countermeasures for the virus and consider additional steps if necessary.