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Viral outbreak underscores value of Hong Kong’s ‘one-country, two-systems’ policy

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HONG KONG – The COVID-19 epidemic now sweeping across Asia may damage the global economy more than the 2003 outbreak of severe acute respiratory syndrome (SARS), data analysis firm IHS Markit warns. While strong economies like Hong Kong will not be immune to the virus, the “one country, two systems” policy under which the city functions will help shield it from the worst of the crisis.

SARS, which claimed almost 800 lives globally, shaved as much as 1 percent off China’s growth in 2003 and cost the world economy $40 billion. COVID-19, which has killed hundreds and sickened thousands in China, could reduce the country’s real gross domestic product growth by 1.1 percentage points — and that slowdown may hit the world economy hard, IHS Markit says. The virus has already spread to other major population centers in Asia, such as India.

“China’s impact on the world economy is much larger now than during the SARS outbreak, meaning the slowdown in Chinese growth may be a significant drag on global growth,” says IHS Markit. “China’s economy was the sixth-largest in the world in 2002, accounting for 4.2 percent of world GDP; it is now the second-largest economy in the world, accounting for 16.3 percent. Similarly, China is now the second-largest importer in the world, accounting for 10.4 percent of the world’s goods imports, compared with 4 percent of the world’s imports in 2002.”

Pictet Wealth Management scaled back its 2020 growth projection for China by 0.3 percentage point, citing disruptions to economic activity due to measures to halt the spread of COVID-19. Goldman Sachs estimates a hit on the global economy of up to 0.2 percentage point so long as........

© The Japan Times