SINGAPORE (Feb 7): There is growing alarm over the spread of the novel coronavirus (2019-nCoV), whose first confirmed case was reported in China's Wuhan city. The population of infected patients continues to grow as more evidence of community spread outside China emerges. Officials across the world are reacting with radical measures including banning travellers from China from entering their countries. Worried ordinary folks are donning face masks and, to avoid crowded areas, are cutting back on shopping and entertainment. As concerns that global economic growth could falter widen, commodity prices have corrected and financial markets have swooned.

But, this alarm may be an over-reaction. Our read of the hard evidence is that (a) Although the virus seems to spread more easily than SARS, it has a much lower fatality rate than SARS or MERS, whose fatality rate is even higher than SARS; (b) While the number of infections will certainly grow in coming days, current efforts are likely to bring its geographic spread and the number of infections under control within the next few weeks; (c) the bulk of the direct economic damage will be to the Chinese economy, with indirect but manageable spillovers into China’s economic partners; and (d) the support measures that the Chinese authorities and governments elsewhere are deploying are likely to mitigate the worst economic impacts of the epidemic.

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