Dr. Rajeev Dhawan of the Economic Forecasting Center at Georgia State University’s Robinson College of Business recently shared his insights regarding the impact of COVID-19, more commonly known as coronavirus, on the 2020 Economic Forecast. While several factors currently impact the real estate market such as a sharp drop in oil prices to the pullback of the presidential election, Dhawan is most concerned about the geopolitical developments that could throw a potential curveball at the U.S. economy.
According to Dhawan, the biggest threat to the 2020 economic forecast is the spread of COVID-19. The extent of the virus’ spread could possibly threaten his baseline forecast and significantly impact the U.S. economy and even the real estate market.
“At present, the key issue for us is the incidence of spread of the virus outside China, and the Chinese have taken steps to limit it,” Dhawan said. “But, unlike a finite event, such as a hurricane or earthquake, the coronavirus is still playing out, making it hard to assess economic impact.”
COVID-19 first appeared in China towards the end of 2019. Since its outbreak, the virus has spread throughout China and worldwide. Today, known cases exceed well over 100,000 and health concerns regarding those living in the affected countries are on the rise. The extreme concerns have resulted in several cities and countries, especially in China where the outbreak is most prevalent, shutting down for an extended period of time and requiring citizens to stay at home to reduce the virus’s spread.
China has the world’s second-largest economy in the world, therefore playing a huge role in the economy worldwide. With Chinese factories shutting down and workers forced to stay home, China has found its production and economy in a sudden halt. This leaves Americans questioning how the coronavirus will impact the economy in the United States, as well as the real estate market.
“China is a vital part of the world’s supply chain for goods ranging from toys to iPhone,” Dhawan said. “For these goods to be delivered to customers they first must arrive at our ports. Less production in China means less cargo arriving at U.S. ports, and subsequently less demand for trucking and warehousing. This is the potential threat that one of our main engines of growth, the Port of Savannah, faces if the virus induced shutdown in China lasts until mid-April.”
Georgia’s maturing business cycle and weakening job quality means that geopolitical developments are likely to have a greater impact than they have in the past. Plus, as a result of China’s production halt, the coronavirus has the potential to stir up even more trade issues between China and the U.S. This could result in a decline in sales of products produced in China as well as shipping delays or restrictions.
The spread of the virus worldwide along with new coronavirus cases in the metro Atlanta area certainly poses a threat to the state and nation’s economy. Only time will tell how the coronavirus will impact the economy and the real estate market. There’s no doubt it will have its effects, but the extent is still uncertain.
We’d love to know your thoughts on this 2020 Economic Forecast regarding the coronavirus. How do you think the real estate market will be affected and what effects are currently being seen?