David Rosenberg: If rail blockade persists, half a percentage point of growth could be lost
The coronavirus is not just a China problem, according to David Rosenberg.
While efforts are underway to quell the spread of the COVID-19 virus and contain it to China’s Hubei province, the economic damage that the outbreak inflicts on the Chinese economy could easily have a ripple effect in Canada.
“I could see Chinese [gross domestic product] growth for this quarter and next quarter being hit at least four percentage points,” Rosenberg, chief economist and strategist at Rosenberg Research and Associates, told BNN Bloomberg in an interview Thursday.
“All of a sudden, you’ve taken a half percentage point off of global GDP growth, and for countries like Canada, Australia and New Zealand that are very sensitive to global shifts in the world economy, that’s going to come back and bite us pretty hard.”
Rosenberg said China’s exponentially-larger place in the global economy will make the coronavirus’s impact far harder to handle than that of the 2002-03 outbreak of severe acute respiratory syndrome (SARS).
“The reality is that China bulks a lot larger (now),” Rosenberg said, adding that China’s economic output currently represents 16 per cent of global GDP, in contrast with four per cent in 2002-03.
“The impact, I think, is going to be a lot bigger in terms of GDP,” he added.
The Canadian economy, meanwhile, still faces a recession risk, Rosenberg said.
“I still say the odds of recession are well over 50-50,” he said, citing his own metrics.
“I have the Rosenberg definition, which is that when you have real GDP-per-capita contracting, you’re already in some form of recession. So, I actually think if we’re not there (now), we’re going to get closer in the next few quarters.”