So many factories in China — including the ones that make iPhones and GM cars — have shut down due to the coronavirus outbreak that global demand for oil has tanked for the first time since the financial crisis of 2008.
Demand for oil is expected to drop by 435,000 barrels a day in the first quarter of this year compared to a year ago, according to the International Energy Agency. And the full-year outlook is dim: The agency slashed expectations for demand in 2020 by 30% from where they were before the pandemic.
"There’s little doubt that the virus will have a larger impact on the economy and oil demand than did SARS," the IEA said in its report.
The pandemic is so bad that it’ll mess with China’s overall economic growth. Economists are revising their predictions for how much the country’s gross domestic product will expand in 2020 from 5% down to between 3% and 4%, according to the Wall Street Journal.
And it’s not helping that the novel coronavirus, now officially (and ominously) called Covid-19, is spreading fast. Chinese officials on Thursday reported 242 new deaths from the coronavirus, and reported infections in mainland China jumped from about 44,700 on Wednesday up to nearly 60,000 on Thursday.
To deal with the crisis, China has quarantined entire cities, instituting “war-time measures” at the epicenter of the outbreak in the Hubei province. Some 60 million people are on lockdown.
That, turns out, isn’t great for the economy.
Workers at Foxconn factories, which make iPhones and other electronics, were reportedly told to get back to work earlier this week, but only 10% of them did so, according to Reuters. Shipyards are facing labor shortages, the head of a Hong Kong–based shipping company told the New York Times. In Japan, Nissan said it would shut down one of its factories for four days because it couldn’t get supplies from China.
The outbreak is also affecting demand for other fossil fuels: Some Chinese companies are backing out of deals to import liquefied natural gas.
There might be a small silver lining to the epidemic: The slump in demand for fossil fuels and reduced economic growth could mean a dip in carbon emissions. China’s the world’s biggest carbon polluter — it pumped more climate-heating greenhouse gases into the atmosphere than the U.S. and the European Union combined last year, according to data from the Global Carbon Project.
But as the virus continues to spread, the quarantines put into place to contain it mean people aren’t driving or flying. The shuttered factories are some of the biggest greenhouse gas polluters. And when economies slump, greenhouse gas emissions tend to drop too.
Cover: A man in protective gear checks a visitor's body temperature on Feb. 10, 2020, at the entrance of Toyota Motor Corp.'s factory in Tianjin. Operations at the plant have been suspended amid the spread of the new coronavirus. (Kyodo via AP Images) ==Kyodo