Spread of the Coronavirus and the scare surrounding it will definitely drag down global growth, Reserve Bank of India Governor Shaktikanta Das told news channel CNBC TV18 today.
“...definitely the Coronavirus is going to pull down global growth. Although IMF (International Monetary Fund) has said that it will pull down global growth by 0.4%, I think it could be more," Das said.
As per the World Health Organization's latest report, 2,804 patients have died due to Coronavirus, of the total 82,294 people that have so far been affected.
Saying that coronavirus is higher in "intensity" than the Severe Acute Respiratory Syndrome breakout--when China's growth had fallen almost 1%--Das said that the impact of the coronavirus on China's growth is likely to be adverse, which in turn will hit global growth.
He, however, added that "the Chinese" have the "innate capability to sort of bounce back".
On the impact of the virus on India, Das said that while they are awaiting more data to arrive at an accurate picture of the impact, some manufacturing sectors like colour televisions and mobile phones--which are largely dependent on imports from China--could be affected.
"...in pharma, large companies usually hold stocks for 3-4 months. Pharma prices again there could be an uptick, but I don't know. I'm not trying to sort of say that there will be an increase but there are so many uncertainties so some more time we need to arrive to more accurate conclusion," he said.
Computer and electronic components face the biggest risk of global supply-chain disruptions stemming from China's coronavirus outbreak, Fitch Ratings said in a note today.
The rating agency said that as per latest data, computer and electronics sector has the largest share of China's intermediate imports and exports and has the highest share of foreign value-added embodied in exports.
"Chinese factory shut-downs will affect output in global industries reliant on Chinese inputs even where there is no direct exposure to lower demand in China," it said.
Asked whether the likely impact on global growth could lead to benign inflation in the country, Das said that crude oil prices have softened in the last couple of days, and global demand for the commodity could be lower now.
"..but again it depends on the response from oil producing countries, how they are going to calibrate their oil production," he said.
In January, the headline inflation based on the Consumer Price Index (Combined) rose to 7.59%--the highest since the Narendra Modi-led government first came to power in May 2014. This was the second straight month in which inflation was above the upper bound of RBI's mandated inflation target of 2-6%.
On India's GDP data released today, Das said it was on expected lines, and that the 5% GDP target for 2019-20 (Apr-Mar) looks "doable".
Data by the National Statistical Office today showed that the India's GDP growth fell to 4.7% in Oct-Dec from 5.1% a quarter ago. The statistics office revised upwards the GDP growth for Jul-Sep and Apr-Jun to 5.1% and 5.6%, from 4.5% and 5.0%, respectively.