Global markets take a plunge, NWA companies impacted by coronavirus outbreak

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NORTHWEST ARKANSAS, Ark. (KNWA) ā€” The spread of a viral outbreak is threatening global economic growth as the Dow Jones Industrial Average plummets over 1,000 points.

It was one of the worst day for the stock market in two years. The ripple effects are being felt around the world.

“It’s unexpected. No one really saw it coming, and its something that has been traveling really rapidly,” said Raja Kali, Professor of Economics & Departmental Chairperson at the Sam Walton College of Business. “I’m surprised that it took so long for the stock market to absorb the unfolding crisis.”

He says global supply chains have been disrupted by the viral outbreak, especially China, a hub of global manufacturing.

“Global car manufacturing is virtually at a standstill. The Korean car companies like Hyundai and Kia have stopped production. Car production has stopped in Japan. Germany has stopped car production,” Kali said.

It’s a similar story on the demand side.

“For lots of everyday products that we consume, TV sets, refrigerators, washer machines ā€” there are going to be stock-outs,” he said.

With the exception of select items like masks and some cleaning supplies, Walmart has had no immediate, short-term impact since its suppliers stockpiled inventory in anticipation of the new year holiday, a statement said.

“Longer-term disruptions to imports of finished products and regional supply chains will depend on the duration and intensity of the outbreak and we will be leveraging our global supply chain to make up any temporary shortfalls,” Molly Maj with International Corporate Affairs for Walmart said.

Kali adds, “companies like Tesla, Apple, Starbucks, Tyson for example, which was looking forward to exporting lots of meat products to China…is being affected.”

While Kali says you may end up paying more out of your pocket if companies can’t absorb the costs, you could save at the pump. “Gasoline prices are down fairly significantly. This is because of the global fall off in demand that comes from China.”

Kali says there’s also been a sharp decline in global economic growth forecast.

Copyright 2020 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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