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Follow on Google News | Coronavirus may cause global financial meltdownIf the Coronavirus continues over the next six months, it may cause significant damage to the global supply chain, world GDP growth, and risk to the global debt markets
By: Dr. Steve Johnston author.com last into next year, and have dramatic financial consequences to the global financial markets. Japan's economy is heading into a recession. Germany, the world's fourth largest economy, is also expected to stumble as the Coronavirus epidemic causes a slump in trade with China. The U.S. has projected GDP growth of 2%, but this could be in jeopardy with a world wide global slowdown and supply disruptions of strategic parts from China. If China continues to restrict 150 million people to their homes, and restrict the movements of 760 million people, their manufacturing capacity will drop substantially. If they remove the restraints on travel, they will allow the Coronavirus to expand. They are between a rock and a hard place. In 2019 Chinese GDP was approximately $14.3 trillion or 16% of global GDP. China produces many key components in the global manufacturing supply chain. Also China is both a large consumer of global raw resources and consumer goods. It is not inconceivable that a prolonged slump in the Chinese economy could tip the global economy into a recession in 2020. Global debt is on track to reach more than $257 trillion in the coming months. Total Chinese debt is now close to 310 percent of GDP and is vulnerable to an economic slowdown. According to the People's Bank of China, non-performing loans at commercial banks in China by the end of 2018 had risen to over two trillion yuan. The Baoshang Bank failed and was taken over by the PBOC. Seventy five percent of small enterprise companies recently interviewed said they would run out of cash in the next two months if the Coronavirus epidemic did not decline. China's banking debt crisis is a ticking time bomb that may be set off by the current Coronavirus caused economic slowdown. The consequences of a meltdown in China could have worldwide consequences. I am long Gold Resource Corporation (GORO). For more info on current events see: http://www.drstevejohnstonauthor.com/ End
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