The new coronavirus in China is “a very serious problem” which creates uncertainty for the world economic outlook, said the president of the American central bank on Wednesday.
During a press conference, Jerome Powell pointed out that the growth of the world economy seems to be stabilizing while certain risks have diminished, especially since China and the United States have paused in their trade war.
However, “uncertainties remain including those posed by the new coronavirus,” he said.
“It is a very serious problem and I want to start by talking about the enormous human suffering that the virus is already causing,” he added.
The Fed chairman also noted that a disruption in activity in China “and perhaps on a global scale” should be expected due to travel restrictions and business closings to avoid the spread of the virus.
However, he refused to speculate on the magnitude of the economic impact since the epidemic is in its infancy.
“Of course, we are watching the situation very carefully,” he added, stressing that the Fed will be particularly attentive to “possible ramifications in the United States”.
Nearly 6,000 people have been infected with the virus in China, where 132 patients have died, according to the latest official report.
Last year, the world economy recorded the slowest growth since the global recession, suffering from trade friction between the two leading world powers which had the effect of slowing the volume of traded goods.
The International Monetary Fund (IMF) forecasts a slight recovery this year.
“We are not at all sure of a global rebound, but there are signs and reasons to wait for it,” commented Jerome Powell.
However, the new coronavirus could be a game-changer.
It “is still too early to say what the effects will be” of this epidemic, he repeated, but “there will clearly be effects, at least in the short term, in China and I imagine in some of its neighbors the closest”.