Coronavirus blow to economy is one-off and for a limited time

With the outbreak of the novel coronavirus, the Chinese economy is facing its most severe challenge in many years. But while the disease and related epidemic control measures are undoubtedly dragging on growth, it is not the first time China has had to cope with such a daunting scenario, and policymakers are taking timely and forceful measures to bring the pandemic to an end as soon as possible, inspiring confidence that the economy will be able to rebound quickly.

The impacts of the epidemic on economic activities have been huge with economists estimating that they could potentially rip 2 percentage points off the country's GDP growth in the first quarter. Sectors such as tourism, transportation, hospitality and catering have been particular hard hit during what would normally have been their peak season.

During the outbreak of severe acute respiratory syndrome 17 years ago, which lasted roughly six months, it led to GDP growth slowing by 2 percentage points in the first quarter of 2003. If the novel coronavirus can be put under control quicker than SARS, the impacts may be less severe.

Such hopes are not unrealistic. The authorities have reacted more promptly and proactively this time compared with 2002-03 when SARS erupted, and the country's public health system is more developed since then.

Which is why Lian Weiliang, deputy head of China's National Development and Reform Commission, emphasized at a news conference on Monday that the economic impacts from the outbreak will only be felt in the short term and that China is fully capable of minimizing the blow to the economy.

While the confirmed cases of the potentially deadly novel coronavirus rose to 17,355 as of Monday evening, according to figures by Chinese health authorities, a total of 531 patients have been discharged from hospital after recovery, raising hopes that as doctors are becoming more knowledgeable about how to treat the disease, the pace of recovery will accelerate, easing people's fears.

The government is also ensuring that all available resources are dedicated to the fight against the virus. On Sunday, the People's Bank of China, China's central bank, announced a range of measures to step up monetary and credit support to enterprises which are helping in its fight against the virus pandemic.

Bringing the pandemic to an end will hopefully be done sooner rather than later, but however long it takes, the impacts of the pandemic will just be one-off and for that limited period. After the novel coronavirus is brought under control and the all-clear is sounded, the unleashing of the pent up demand will, at least partially, make up for the lost activities during the epidemic and provide the necessary boost to kick the economy into a higher gear.

The top priority now is for policymakers to roll out forceful support measures to ensure the corporate sector, particularly small and medium-sized businesses which are the main job providers, can survive the current crisis. Tax and fee reductions and targeted subsidies, among others, should be implemented so that enterprises, especially the small ones, have the chance to survive.

While negative economic effects of the pandemic are still being felt, the authorities need to ensure they are extending a helping hand as much as possible.