The main event of early 2020 is the outbreak of coronavirus in China and its worldwide spread. What is happening already has a significant impact not only on the economy of the Middle Kingdom, but also on the world stock and commodity markets.
Foreign companies cease production in the PRC. Back in January, Toyota announced the termination of its businesses in China. Honda plants located in the country shares the same fate. McDonald's has announced the temporary closure of restaurants in five cities in Hubei province, Wuhan capital which is a home to the virus. Starbucks has also informed about the closure of half its Chinese coffee shops (about 2,000 establishments). British Airways has temporarily canceled all flights to and from mainland China. Other airlines are starting to follow the lead. For example, Lufthansa, one of the world’s largest passenger carrier. All this lowers world oil prices.
Forecasts of the global economy are declining. The Organization for Economic Co-operation and Development has recently estimated the impact of coronavirus at 0.5% of world GDP. This can be an optimistic scenario, as the virus has already been detected in more than 100 countries. Even countries with well-developed medicine are unable to stop its spread. EL MUNDO published an article stating: “Capital Economics, a London-based consultancy, estimated the outbreak losses will cost more than 280,000 million USD in the first quarter of 2020. This is more than the entire budget of the European Union, Microsoft and Apple, and eight times the annual budget of Nigeria”.
At the same time, the National Bank of Ukraine noted that the coronavirus still has a limited and neutral impact on the country's economy. Ukrainian exports continue to rise and import prices are falling even faster than exports, especially on energy supplies. This leads to a reduction in the value of imports.
“De Visu” Group is prepared for the challenges caused by force majeure and has sufficient expertise to assist clients in an unstable situation.
“De Visu” monitors developments in the global economy and keeps an eye on the potential impact of coronavirus on capital markets. “De Visu” experts are engaged in a dialogue with regulators, companies we audit and international partners-members of PrimeGlobal. We keep our finger on the pulse and respond to external challenges instantly” Oleksandr Boiko, “De Visu” Group President, says.
"Given that the coronavirus is spreading rapidly, the need for disclosure is likely to change over time as more information about the epidemic emerges. Companies need to monitor developments to provide up-to-date and meaningful disclosures to their shareholders when preparing annual reports”, Yurii Burdym, “De Visu” Group Audit Partner, adds.
