World finance officials plot ‘powerful and timely’ response to beat coronavirus

BEIJING (Reuters) – Group of Seven officials will discuss ways to bolster their economies against the impact of the spreading coronavirus outbreak on Tuesday, but are not expected to call for new spending or coordinated interest rate cuts, a G7 official said.

Crowds wearing protective masks, following the outbreak of the coronavirus, are seen at the Shinjuku station in Tokyo, Japan, March 3, 2020. REUTERS/Athit Perawongmetha

G7 finance ministers and central bank governors were due to hold a conference call at 1200 GMT to discuss the outbreak. But according to the official, who declined to be identified, a statement they are crafting does not detail any fiscal or monetary steps.

A recovery in world stock markets and oil prices picked up pace on Tuesday, as global policymakers signaled a united front to address the economic fallout from the spreading coronavirus.

Bank of England Governor Mark Carney said the G7 officials were working on a “powerful and timely” response.

“This is a tug of war between hope and fear. Central banks are giving hopes with their potential stimulus,” said Vasu Menon, senior investment strategist at OCBC Bank Wealth Management.

“The question is what they will do? Monetary policy is already very loose and interest rates are very low.”

Global stocks suffered a rout last week on growing fears that the disruption to supply chains, factory output and global travel caused by the epidemic could deal a serious blow to a world economy trying to recover from the U.S.-China trade war.

The G7 official, who has direct knowledge of the deliberations, told Reuters the officials would pledge to work together to mitigate the damage to their economies from the fast-spreading epidemic.

The language of an expected statement was subject to change as it was under discussion, the official said.

The coronavirus, which emerged in the central Chinese city of Wuhan late last year, has spread rapidly around the world over the past week, with more new cases now appearing outside China than within.

There are more than 90,000 cases globally, with more than 80,000 of them in China, and infections appearing in 77 other countries and territories, with Ukraine the latest country to report its first case.

China’s death toll is at 2,943 with more than 75 deaths elsewhere.

New cases in China have been falling sharply, with 125 reported on Tuesday, thanks to its aggressive measures to stop the spread of the disease.

After what critics said was an initially hesitant response to the virus, China imposed sweeping restrictions, including suspensions of transport, sealing off communities affecting tens of millions of people, and extending a Lunar New Year holiday across the country.

QUARANTINE ORDERS

Now China is increasingly concerned about the virus being brought back into the country by its citizens returning from new hot spots elsewhere, and authorities on Tuesday asked overseas Chinese to reconsider or minimize their plans to travel home.

All travelers entering Beijing from South Korea, Japan, Iran and Italy would have to be quarantined for 14 days, a top city official said. Shanghai has introduced a similar quarantine order.

The most serious outbreak outside China is in South Korea where President Moon Jae-in declared war on the virus, ordering additional hospital beds and more face masks as cases rose by 600 to nearly 5,000. Thirty-four people have died in South Korea.

In the United States, the virus is now believed to be present in at least four communities in the Pacific Northwest – two in northern California, one in Oregon and one in Washington state – and authorities there are having to go well beyond the quarantine of infected travelers and tracing of close contacts, which until now had been the response.

Six people have died in the Seattle outbreak. The U.S. Centers for Disease Control and Prevention lists more than 90 cases across the United States, a large bulk of them patients who were repatriated from the Diamond Princess cruise liner that had been quarantined in Japan.

Slideshow (10 Images)

Iran reported infections rising to 1,501, with 66 deaths, including a senior official.

The death toll in Italy jumped to 52 on Monday from 34 the day before and the total number of confirmed cases in Europe’s worst-affected country climbed past the 2,000 mark.

Germany reported 31 new infections, taking its tally to 188.

Writing by Robert Birsel and Nick Macfie; Editing by Simon Cameron-Moore

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