While factories, shops, hotels and restaurants are warning about plunging foot traffic that is transforming city centers into ghost towns, behind the closed doors of apartments and suburban homes, thousands of businesses are trying to figure out how to stay operational in a virtual world.

“It’s a good opportunity for us to test working from home at scale,” said Alvin Foo, managing director of Reprise Digital, a Shanghai ad agency with 400 people that’s part of Interpublic Group. “Obviously, not easy for a creative ad agency that brainstorms a lot in person.” It’s going to mean a lot of video chats and phone calls, he said.

The cohorts working from home are about to grow into armies. At the moment, most people in China are still on vacation for the Lunar New Year. But as Chinese companies begin to restart operations, it’s likely to usher in the world’s largest work-from-home experiment.

That means a lot more people trying to organize client meetings and group discussions via videochat apps, or discussing plans on productivity software platforms like WeChat Work or Bytedance’s Slack-like Lark.

The vanguards for the new model of scattered employees are the Chinese financial centers of Hong Kong and Shanghai, cities with central business districts that rely on hundreds of thousands of office workers in finance, logistics, insurance, law and other white-collar jobs.

One Hong Kong banker said he’s going to extend an overseas vacation, as he can work from anywhere with a laptop and a phone. Others say they are using the time typically spent wining and dining clients to clear their backlog of travel expenses. One said he’s shifted focus to deals in Southeast Asia.

“No one is taking meetings, my schedule is pretty empty,” said Jeffrey Broer, a venture adviser in Hong Kong. “One person emailed me: ‘Shall we meet somewhere in February?'”

One of the most unsettling factors for employees is the fast-changing impact of the virus, which is prompting daily changes in corporate directives.

Tiko Mamuchashvili, a senior event planner at the Hyatt hotel in Beijing who was supposed to return to work on Friday, was initially told her vacation would be extended until Feb. 3. Then she received a notification to work from home for two additional days. A few days later, the directive was extended until Feb. 10. She has to notify her department each morning about her whereabouts and report whether she is running a temperature.

“Usually going back to work from holidays feels a little weird, but working from home this time with such short notice feels even more unusual,” she said. With hotel event cancellations rolling in on a daily basis, “basically, all I can do is answer emails,” she said.

Some managers worry the office exodus will lower productivity, but there’s evidence the opposite may be true. A 2015 study from Stanford University in California found that productivity among call-center employees at Chinese travel agency Ctrip went up by 13% when they worked from home due to fewer breaks and more comfortable work environments.

While the virus may test that theory on a wider scale, it poses an existential threat to another new business model: co-working spaces, which multiplied around big Chinese cities in recent years as property rents skyrocketed and tech startups boomed.

“It will be a very tough time,” said Dave Tai, deputy director of Beeplus, a Chinese co-working space and bakery with 300 employees.

The virus delayed the opening of its Beijing location and he says it’s pretty much impossible for him and others in his industry to work from home. Without customers willing to work in close quarters at the physical space, the business will die.

“The core of work space is community, people coming together. It’s difficult to replace that interaction and connection online,” he said.

For many companies, instructing office workers to stay home only solves part of the problem. Many rely on factories, logistics companies and retail outlets that face their own disruptions.

For phone-case maker Casetify, 2020 was supposed to be the best year yet. Headcount at the Hong Kong-based company had surpassed 150 by the end of December, and it was aiming to double sales this year.

But the spread of the virus from the city of Wuhan caused the factories in China that make its products to stay shut and prompted Casetify to ask most employees to work from home. A new outlet in Hong Kong’s airport lay empty. Sales in the city tanked.

“The show must go on, somehow,” said Casetify Chief Executive Officer Wes Ng, who has been logging onto a laptop in an apartment he shares with his wife and 9-month-old son.

Casetify has 30 days of extra stock, but Ng says there’s no plan B if the factories don’t reopen soon, a plight shared by thousands of other businesses in China and around the world.

Even for those who can do business by internet and phone, the virus means there may not be much business to do.

Bankers say IPOs and deals are on hold. Transaction value in the first 30 days of 2020 was half what it was the year before, according to data compiled by Bloomberg.

“The worst is yet to come,” said Nomura analyst Ting Lu in a research note. “We reckon the coronavirus could deal a more severe blow to China’s economy in the near term, relative to SARS in 2003.”

While statistics suggest the new coronavirus isn’t as lethal as SARS, it has already infected more people, and the speed at which the disease has spread is fueling fear. A big part of the expected blow to the economy during the current outbreak is likely to come from changes in “human psychology,” according to Warwick McKibbon, professor of economics at the Australian National University in Canberra.

He said SARS cost the global economy $40 billion and predicts the hit from coronavirus will reach three or four times that amount. “Panic is what seems to be the biggest drain on the economy, rather than deaths,” he said.

With factories shuttered and office workers staying home, many in China’s services industry face a difficult time. The sector is much bigger than it was during the SARS outbreak, accounting for 53% of the economy, up from 41% in 2002. But without customers, many businesses are in limbo.

Blockbuster movie premieres, most of which were slated for the new year holiday, have been postponed, Nomura said.

Some businesses have turned to the internet to help keep customers loyal, hoping to weather the epidemic.

Shanghai gym owner Fenix Chen had intended to close his gym Hi Funny for three days for the Spring festival. He delayed reopening until Feb. 10, in line with the city’s recommendation.

“Most people in Shanghai are basically staying at home, avoiding public places,” he said. “The fear from the virus outbreak will have a lasting impact on our business.”

So Chen is encouraging clients to exercise at home and posting instructional videos online. “If they do continue this habit, that’s also important for our business after the virus blows over,” he said.

The S&P 500 Index bounced back from the worst week in six months, with major averages pushing higher after manufacturing data topped estimates. Shares in Shanghai — which hadn’t traded since holidays began Jan. 23 — tumbled the most since 2015 as the nation’s economy remained virtually shut down because of the virus. The Stoxx Europe 600 Index rose as support measures from China’s government helped stem losses in other markets.

Technology and consumer shares paced gains in the U.S. Tesla Inc. rallied above $700 a share, while Gilead Sciences Inc. climbed with China preparing to test one of the company’s new anti-viral drugs. Treasuries sank. Energy producers slid with the price of oil. The offshore yuan weakened to more than 7 per dollar. The dollar gained.

Investors shifted gears on Monday after global equities sank in their worst week since August on concern economies will falter as the virus spreads. The People’s Bank of China cut rates as it injected cash into the financial system on Monday, part of a slew of measures to shore up their financial markets. Still, the economic toll is becoming clearer, with Beijing reportedly evaluating whether its growth target this year should be softened. A manufacturing reading in the U.S. topped estimates.

“It continues to be just a big unknown, but the U.S. goes into this with accelerating growth. We go into this in pretty good shape, it’s not like we were slowing,” Jim Paulsen, Leuthold Group Inc.’s chief investment strategist, said by phone. “Typically these things don’t last forever. “They’re going to hit China really hard in the first quarter, but maybe it’s pretty much wound up by then.”

Elsewhere, the pound slid on fears of a new cliff edge in trading arrangements between Britain and the European Union. Copper futures in London halted 13 sessions of declines.

Norway’s krone fell to a three-month low versus the euro after the nation’s manufacturing PMI data came in weaker than expected and on news of a drop in China’s oil demand.

These are the main moves in markets:

Stocks:

– The S&P 500 Index increased 1.1% as of 11:01 a.m. New York time.

– The Nasdaq 100 Index gained 1.5%.

– The Stoxx Europe 600 Index advanced 0.4%.

– The MSCI Emerging Market Index lost 0.1%.

Currencies:

– The Bloomberg Dollar Spot Index advanced 0.3%.

– The British pound decreased 1.5% to $1.3014.

– The euro declined 0.3% to $1.1057.

– The Japanese yen weakened 0.2% to 108.51 per dollar.

– The offshore yuan weakened 0.2% to 7.0147 per dollar.

Bonds:

– The yield on 10-year Treasuries gained four basis points to 1.55%.

– Germany’s 10-year yield climbed one basis point to -0.43%.

– Britain’s 10-year yield advanced one basis point to 0.529%.

Commodities:

– West Texas Intermediate crude fell 0.9% to $51.05 a barrel.

– Gold futures weakened 0.5% to $1,579.70 an ounce.

– LME copper climbed 0.4% to $5,587.50 per metric ton.

Chinese stocks dropped sharply Monday as coronavirus infections on the mainland surged past 17,200, extending a sell-off that wracked Wall Street last week. The benchmark Shanghai Composite Index fell more than 8 percent on the first trading day after the Lunar New Year holiday, its steepest one-day decline in four years.

The outbreak has only intensified ever since Chinese markets were last open on Jan. 23. Many nonessential Chinese businesses have shut down, tourism has disappeared and consumer spending has plummeted.

U.S. markets roared back Monday, with the Dow Jones industrial average up 300 points. The Standard & Poor’s 500 and Nasdaq composite were both up 1 percent.

Those gains stood in stark contrast to Friday, when the Dow plunged 2 percent, wiping out January’s gains, while the S&P 500 and Nasdaq composite fell 1.77 and 1.59 percent, respectively. The declines came as the World Health Organization declared a public health emergency, and Delta Air Lines and American Airlines joined other major carriers in suspending all service to China.

Saudi Arabia is pressing for a major oil production cut as coronavirus threatens crude demand, the Wall Street Journal reported on Monday. Representatives from the Organization of the Petroleum Exporting Countries, or OPEC, and its allies will meet this week to discuss options in the wake of the outbreak, which prompted the largest monthly crude-price drop in 30 years. China is also the world’s leading oil consumer.

Analysts also are closely watching the outbreak’s toll outside of China.

“[Over the weekend] there were signs the outbreak is slower outside of Hubei, and there have not been any major international outbreaks,” analysts at Cowen wrote on Monday. “However, new outbreaks often come in waves, and the numbers could also worsen going forward.”

European indexes were in the green Monday.

Before the outbreak, which has spread to 23 countries outside China, economists had expected global manufacturing to pick up at the beginning of 2020, in part due to the recent trade deal between Washington and Beijing.

But the outbreak is already sending spirals through the supply chains of American companies that rely on China for parts and materials. From consumer electronics to automobiles to medications, China is a major economic engine where production could grind to a halt until the public health crisis is under control.

So far, the White House has downplayed the threat. President Donald Trump’s top economic aide, Larry Kudlow, said last week that he expects the virus to have “no material impact” on the U.S. economy.

On Sunday, China’s central bank said it would inject 1.2 trillion yuan – roughly $173 billion – worth of liquidity into the markets. The Chinese yuan fell below 7 to a dollar, while commodity prices traded in Shanghai also fell sharply.

Many economic analyses point to the limited repercussions of the 2003 SARS epidemic. At the time, the Chinese economy bounced back relatively quickly when consumer spending returned to normal and businesses reopened. But China’s $14 trillion economy is four times as large as it was then and much more entrenched in global trade.

About 150 million Chinese business executives and tourists took an international flight in 2018, the most recent data available, more than seven times the 2003 figure, according to JPMorgan. Globally, the number of shipping containers moving among the world’s ports has almost tripled, according to the United Nations.

Yet the pandemic should only lead to short-lived disruption, instead of changing the market trend and the major outperforming sectors, according to a CITIC Securities report.

As a one-off shock, the epidemic is expected to cause a quick and deep market slump, followed by a slow bottoming-out, the report said, citing that the A-share market should be on an upward trajectory over the next two and three years driven by tech shares.

By 10:10 am, the SCI was trading at 2754 points, 7.5 percent below the closing price of the previous session on Jan 23.

The National Bureau of Statistics said on Monday that profits of China’s major industrial firms declined 6.3 percent year-on-year December last year, down from the 5.4 percent year-on-year expansion in November.

China’s industrial sector may see prolonged pressure in the near future as the coronavirus outbreak weighs on market demand and leads to the shortage of labor, analysts said.

But in the medium and long run, the industrial sector is expected to meet its recovering season as the fundamentals of the Chinese economy remain strong, they said.

The figure reflects a sluggish 1.88 percent growth in tourist arrivals from 2018, which recorded 15.81 million individuals entering the country, because of a significant surge in tourist arrivals in the summer season, which lasted between June and August, according to BPS data.

“We still have work to attract more foreign tourists to come into Indonesia,” said BPS head Suhariyanto during a press conference in Jakarta. The agency recorded a contraction of 2.03 percent of foreign arrivals in December last year, which saw 1.37 million foreign tourists.

According to BPS data, 9.8 million foreign tourists visited Indonesia by using airlines, followed by 4.1 million using sea transportation and 2.1 million using land transportation.

Suhariyanto said that Ngurah Rai Airport in Bali and Soekarno-Hatta International Airport in Jakarta saw the most foreign arrivals in 2019, recording 6.23 million and 2.41 million, respectively.

BPS data showed that in 2019, Bali recorded an increase in foreign arrivals of 3.55 percent compared to 2018, while Jakarta recorded a decrease of 14.05 percent compared to 2018. Meanwhile, Batam recorded 1.94 million of foreign arrivals through sea transportation in 2019, an increase of 3.21 percent.

Suhariyanto said Malaysia sent the most tourists to Indonesia, followed by Singapore and China in 2019.

“However, the coronavirus outbreak in China will no doubt lower foreign arrivals from China to Indonesia this year,” said Suhariyanto.

As of Monday, the coronavirus had killed 362, all but one in China, and had infected nearly 17,392 globally, surpassing infections caused by Severe Acute Respiratory Syndrome (SARS), the result of another strain of coronavirus that originated in China in 2003.

The Indonesian government declared on Sunday that it would ban all travel to and from China to prevent the spread of the deadly and highly contagious coronavirus.

The ban, which took effect at 12 a.m. on Monday, prevents visitors who have stayed in China for 14 days or more from visiting or transiting in Indonesia. The government will suspend visa-free and visa-on-arrival provisions for Chinese citizens.

The ministry is planning to hold a seminar to give knowledge about trade regulations with Britain after Brexit this March, so that Thai entrepreneurs are not affected by the changes.

Auramon Supthaweethum, director-general of the Trade Negotiations Department, said that the United Kingdom officially ceased to be a member of the European Union (EU) at 11 pm GMT on January 31, three and half years after Britain voted to leave the EU in a referendum.

From now until the end of 2020, it will be a transition period of 11 months for the UK to remain under British regulations but without voting rights. Both sides must hasten negotiations, establish trade and security agreements, in order to ensure smooth relations between the two sides when the UK completely leaves the EU on January 1, 2021.

Auramon said Britain’s exit from the EU will not have much of an impact on Thailand. There may be a slight fluctuation in the value of the pound. But trade between the UK and other countries, including Thailand, will continue as normal under old trade rules, as though the UK is still a part of the EU for at least until the end of the year. However, during this period the UK will hold discussions for a trade agreement between them. The Thai Trade Negotiations Department will follow up on these discussions to coordinate with relevant sectors and prepare for appropriate adjustments.

She said the department has closely followed the Brexit situation and was preparing measures to support any after-effects. In particular, there will be negotiations with both the EU and Britain on the amendment of the WTO tariff quota table for 31 products, including cassava, cassava flour, white rice, brown rice, broken rice, animal products, canned fish wings, etc for which Thailand has received quotas from the EU. It will have to allocate new quotas after Britain leaves the EU with the primary goal of preserving Thailand’s full quota. Both the EU and Britain have to allocate new quotas, which should not be less than what Thailand enjoyed while Britain was still an EU member as well as reflecting the actual trade volume between Thailand and the EU. Britain is Thailand’s 21st most important trading partner (second in the EU behind Germany), with trade in 2019 valued at $6.26 billion. Thailand enjoyed a trade surplus of $1.426 billion.

Closer relations with the UK after Brexit is, therefore, a matter of importance to Thailand. The department is currently studying the policies and measures that hinder trade and investment between Thailand and the UK. There are meetings scheduled to brainstorm opinions with the government and the private sector on February 7 and 13 respectively. When Thailand and the UK complete each other’s trade policy studies, both sides will go into the discussions to prepare a joint trade policy report. This will help pave the way for FTAs ​​to be created in the future.

In this regard, trade between Thailand and England in 2019 totalled US$6.260 billion, down by 11.04 per cent from the same period last year, with Thai exports to the UK worth $3.843 billion. Major exports include processed chicken, cars and equipment, electrical circuits, gems and jewellery, motorcycle machinery, etc. Thailand’s imports from Britain amounted to $2.417 billion. Major imports were machinery and components, electrical circuit boards, beverages, medical and pharmaceutical products, etc.

Anusorn Tamajai, director of the Economic and Business Research Centre at Rangsit University, warned that the impact of the coronavirus outbreak is expected to be significant as countries close borders, impose travel restrictions and businesses shut down factories in an attempt to contain the spread of China’s new coronavirus.

The death toll has crossed 300 while more than 14,000 patients worldwide are infected by the virus.

The impact will go beyond the tourism industry to manufacturing, exports and the agricultural sectors. It is likely to alter the global geopolitical setting, he warned.

Thailand exports agricultural products worth Bt900 billion to China annually. The impact of the virus outbreak is expected to reduce these exports by 1 to 2 per cent, he said. Five major farm products are: fresh, frozen and dried fruit worth Bt65.5 billion; rubber products worth Bt50.1 billion; tapioca products worth Bt42.3 billion; rice worth Bt9.3 billion and frozen chicken worth Bt6.9 billion. The anticipated export slowdown is expected to depress the prices of some farm products in the next few months, he noted.

As multinational firms close their plants and offices in China, the impact would be felt by supply chains worldwide in the fields of high-tech, electronics, auto and parts. For example, iPhone has announced the launch of a new mobile phone model. Import of raw materials in Thailand are also adversely affected and some factories have temporarily closed operations in Thailand. For example Sica New Materials (Thailand) has shuttered its plant in Thailand without advance notice or compensation to workers, he pointed out.

Retail businesses in Thailand would also be adversely affected, but e-commerce trade and logistics may expand, he said.

To shore up the Thai economy, the central bank would need to lower its policy rate to 1 per cent from 1.25 per cent currently, he said, pointing to the meeting of the Bank of Thailand’s Monetary Policy Committee this week.

He suggested that the Thai government may need to require Chinese tourists to apply for visas, which would let the authorities consider whether a particular tourist should be allowed to visit the country. Due to the delicate situation, travel restriction measures will likely impact relationships between countries, he acknowledged. An estimated million people are locked down in China and a lot of people may be angry with the Chinese government, he said.

The United States, Australia and Singapore have banned foreign nationals who have visited China in the past 14 days from entering their countries while Japan has banned foreigners who have visited Hubei province in China from entry into the country.

The World Health Organisation (WHO), however, has warned that travel bans will disrupt the global economy. The WHO, which on Thursday announced the outbreak of a global health emergency, also warned that a travel ban may not be effective in combating the coronavirus from spreading and people may go underground. It suggested that countries step up screening people to find infected people rather than imposing entry bans.

SEJONG — In the early and mid-2010s, the government’s yearly payouts for jobless people ranged between 3.3 trillion won ($2.7 billion) and 4.5 trillion won.

Amid moderate growth in the volume of unemployment benefits, the figure recorded 4.67 trillion won in 2016 during the previous administration, according to the Korea Employment Information Service.

But the situation began to change in 2017 in the aftermath of en masse business closures by self-employed people, who accounted for about 25 percent of all working people and now faced a tight job market.

KEIS data showed that unemployment benefits have continued to increase sharply over the past three years — reaching 5 trillion won in 2017, 6.43 trillion won in 2018 and an all-time high of 8.07 trillion won in 2019.

The 2019 figure marked a 72.8 percent (or 3.4 trillion won) surge compared with 2016.

Further, compared with five years earlier — in 2014, when benefits paid out amounted to 3.96 trillion won — the 2019 payouts constituted a 103.7 percent increase.

Government officials argue that unemployment benefits payouts rose in proportion to the rise in the statutory minimum wage.

But the rapid growth in payments since the early to mid-2010s could suggest a dire situation in the hiring market during the Moon Jae-in administration.

“Though there were some people who exploited the state-led payout system via shady securing of beneficiary eligibility, data indicated that a growing number of people have been forced to leave their workplaces in the wake of an economic slowdown in recent years,” said an employment research analyst in Seoul.

More recently, the KEIS data showed that the number of recipients has surged among South Koreans engaged in services such as food, lodging and tourism as business owners.

A year earlier, in December 2018, only 642 food retailers were paid unemployment benefits. But the number of recipients climbed rapidly in 2019 — to 5,272 in July, 6,032 in August, 6,653 in September, 7,656 in October, 8,546 in November and 9,785 in December.

The figure for lodging and tourism shot up to 2,234 in December 2019, compared with only 131 people a year earlier.

Though the KEIS explains that there could be difference in figures between net recipients and redundancy-included recipients, it is evident that the small-restaurant and lodging-tourism sectors represented a sharp contrast from other major jobs.

Market insiders share the view that the spike in the number of recipients in the food and lodging sectors demonstrates that self-employed people face greater difficulty due to drastic hikes in the minimum wage over the past two years.

For full-time salaried workers, the minimum wage climbed from 1.35 million won per month in 2017 to 1.74 million won in 2019.

According to a statement from the Ministry of Employment and Labor, the average recipient of unemployment benefits was paid 1.18 million won a month in 2017. That average monthly payment surged to 1.51 million won in 2019.

Recipients in their 50s accounted for the largest proportion at 26.2 percent, trailed by those in their 60s with 21.3 percent, those in their 40s with 19.4 percent, those in their 30s with 19.2 percent and those in their 20s at 13 percent.

The number of recipients of monthly benefits came to about 420,000 in December 2019.

Among the nation’s 17 major regions (provinces and major cities) nationwide, Gyeonggi Province had the greatest number of people on benefits, 113,000. Seoul was next with 80,400, followed by Busan with 33,500, South Gyeongsang Province with 28,200, Incheon with 27,200 and North Gyeongsang Province with 21,200.

On a yearly basis, the number of recipients totaled 1.45 million throughout last year — a record high — as compared with 1.33 million in 2018 and 1.21 million in 2017.

By Kim Yon-se (kys@heraldcorp.com)

The task at hand is urgent: India was the world’s fastest-growing major economy as recently as last year but has since ceded that spot to China. The news has worsened in recent months, with economic output in the current fiscal year expanding at the slowest pace in more than a decade.

The government on Saturday presented its annual budget, a much-anticipated exercise that serves as a manifesto for economic policy. It announced moves to cut certain taxes, encourage investment and reduce its stakes in major publicly-owned companies.

But investors looking for bold steps to power India back to faster growth were left disappointed: The country’s benchmark stock index slid more than 2% Saturday.

Here’s what you need to know about the predicament facing India’s economy.

– – –

How badly is India’s economy doing right now?

Very. While economies around the world have decelerated recently, India has slammed into a wall: In just over a year, economic growth tumbled by nearly half from a rate of 8% to 4.5% in the latest quarter. For a developed country, that would still be a healthy rate of expansion. But in a developing economy such as India’s that hopes to pull tens of millions out of poverty and employ a young and burgeoning workforce, it feels almost like a recession.

The economic data continue to flash warning signs. The corporate and income tax collected by the government – an indicator of overall economic vitality – is set to fall during the current fiscal year for the first time in two decades, Reuters reported. The latest available nationwide figures show that unemployment spiked to a 45-year high in 2018. And leaked data from a flagship survey conducted once every five years indicated that consumer spending fell in 2018 for the first time in four decades.

India’s economy is in the “intensive care unit,” said Arvind Subramanian, who served as the government’s chief economic adviser for four years until 2018. “The evidence is just too large and too mutually supportive to not raise alarm bells.”

– – –

How did India get to this point?

That depends on whom you ask. The government, together with some economists, contends that India is in a temporary downturn, with economic growth suppressed by an unfavorable environment worldwide. By this line of thought, the slump will end later this year and the economy will pick up speed.

Other economists worry that there is something deeper than a cyclical slowdown at work. They say several factors – some of them years in the making – are together acting as a lead weight on the economy. India’s financial sector is dealing with a bad-debt hangover in sectors such as real estate and infrastructure. Bad loans have poisoned the climate for investment, making banks unwilling to lend and companies averse to fresh borrowing.

The government of Prime Minister Narendra Modi made a challenging situation worse, these economists say, with its abrupt decision in 2016 to invalidate most of India’s currency. The move paralyzed the country’s vast informal economy, which is based on cash transactions. The introduction of a nationwide value-added tax soon after – a step economists praised in principle but criticized for its botched rollout – didn’t help.

The picture is “sharp and scary,” wrote R. Nagaraj, an economist at the Indira Gandhi Institute for Development Research in Mumbai, earlier this month. Slower economic growth has led to job losses and stagnant wages in rural India, he said, followed by falling consumer spending. It is the “unmistakable story of [an] economy in distress.”

Economists at Goldman Sachs wrote in a note last year that the current slowdown is the longest India has experienced since at least 2006 and represents a “considerable source of anxiety” for investors.

– – –

How has Modi’s government reacted to the slowdown?

Until recently, the government barely acknowledged that a slowdown was underway. In September, Nirmala Sitharaman, India’s finance minister, announced corporate tax cuts that buoyed stocks and aimed to spur investment but nothing further.

Several economists said the government’s primary focus has been elsewhere in recent months. In August, Modi undid seven decades of Indian policy in Kashmir. In December, his government passed a divisive citizenship law that sparked nationwide protests.

“A disproportionate amount of attention is going into politics,” said Kaushik Basu, a former chief economist at the World Bank and a professor at Cornell University. “The economy is feeling the neglect and that worries investors.”

– – –

What happens next?

Basu said Sitharaman faces a dilemma. The economy needs a jolt of stimulus in the form of higher government spending, but any significant move in that direction risks enlarging the gap between public spending and tax revenue.

“It’s a very dangerous game, but I don’t think she has a choice,” he said. Sitharaman needs to put “more buying power in people’s hands, which could mean that the fiscal deficit that was going to be reined in will not be reined in.”

Amit Basole, an economist at Azim Premji University in Bangalore, said the situation was serious enough that “now is really the time to be concerned about the real economy, not the fiscal deficit.” He urged an expansion of a government program to guarantee jobs in rural areas to get those consumers to spend.

Subramanian, the former chief economic adviser, said the government could start with a more limited set of goals: fixing the jam in the financial system and ensuring the reliability of government statistics so policymakers can properly assess the scope of the problem. On spending, “the government just doesn’t have the space to do anything dramatic or drastic,” he said.

Rates for giant Capesize ships, typically used to carry raw materials such as iron ore, plunged 90% from a September peak to less than $4,000 a day based on an index that tracks their earnings. A wider Baltic Dry Index more than halved in January to hit the lowest since 2016, as the worsening outbreak brought an already-weak freight market because of the Lunar New Year to its knees.

The plunge in shipping rates underscores just how much pull China has in global commodities markets, with the virus upending everything from oil futures to copper prices.

“Weakness is expected to persist amid uncertainty about how long the virus effects will last,” said Ralph Leszczynski, head of research at shipbroker Banchero Costa & Co. Seasonally, rates are already low in January because of the Lunar New Year and lower demand out of Brazil on bad weather, and the virus is an added bearish factor, Leszczynski said.

Iron ore is the biggest dry-bulk cargo by volume, with annual seaborne flows totaling about 1.6 billion tons as vessels carry the key steel-making ingredient from giant mines in Brazil and Australia to users in China and Europe.

Miners have downplayed concerns. Australia’s Fortescue Metals Group said concern over the virus is impacting sentiment rather than the physical trade in iron ore. Separately, Brazil’s Vale said operations at Asian ports are normal.