TOKYO -- The spreading of China's coronavirus epidemic is weighing on the global economy, as some private-sector economists now predict that the country's quarterly economic growth will slow to a rate below 5%.
That outcome would deliver a shock to a country whose gross domestic product grew 6.1% last year -- the slowest pace in nearly three decades.
"Even if the major disturbances are contained about two weeks from now, there will be a significant loss of economic activity in roughly one out of five business days during the January-March quarter," said Ryutaro Kono, chief economist at BNP Paribas.
Kono sees a "large potential" for first quarter GDP growth to fall short of 5%.
The Chinese economy looked poised to stage a recovery in the manufacturing sector in early January. Now with the coronavirus wreaking havoc on the sector and other industries, uncertainties have mounted.
"Factories could make a comeback in production, but the slump in private consumption will continue to put a chill on the economy," said Hideki Matsumura, chief economist at the Japan Research Institute.
The Chinese economy has more than quadrupled since the severe acute respiratory syndrome, or SARS, spread in China in 2003. However, China's rise as an economic power and the globalization of the supply chain means the world economy is more exposed to fallouts from an epidemic.
To contain the spread of the illness, which has killed 425 people and infected more than 20,000, the Chinese government extended Lunar New Year break by three days to Sunday. Chinese stocks tanked on Monday, the first day of trading after the holiday.
The coronavirus is likely to affect the economies of other countries as well. The Chinese government has restricted group travel abroad, and Japan has started to block entry by foreigners who have spent time in China's Hubei Province, where the epicenter of the virus, Wuhan, is located.
Nearly 10 million Chinese traveled to Japan last year, providing a boost to Japan's retail and tourism sectors. For every decrease of 1 million people, Japan's GDP would shrink by about 250 billion yen ($2.3 billion), according to Mitsumaru Kumagai, chief economist at the Daiwa Institute of Research.
China's manufacturing standstill and weak consumption have also fueled concerns. Japanese exports to China in December managed to outpace the year-earlier figure for the first time in 10 months, but the recovery may have been short-lived.
"China is one of the biggest destinations for Japanese exports, and a deteriorated Chinese economy is directly linked to suppressed Japanese exports," said Yoshiki Shinke, chief economist at Dai-ichi Life Research Institute.
Some assessments put Japan's economic cost as high as 1 trillion yen from the drop in exports and visitors.
"The January-March GDP will be depressed by nearly 1% from the previous quarter on an annualized basis," said Taro Saito, executive research fellow at the NLI Research Institute.
Hiroshi Miyazaki, senior economist at Mitsubishi UFJ Morgan Stanley Securities, sees potential for GDP to be pushed down by 0.37%.
Although it is believed the Japanese economy contracted in the October-December quarter of last year, when the consumption tax was increased, a consensus of market analysts had anticipated that consumption and production will steadily recover from the start of this year.
The coronavirus poured cold water on that outlook.
"If the negative effects are prolonged, the timeline for recovery will be delayed," said Nobuyasu Atago, chief economist at Okasan Securities.