The spread of coronavirus will reduce GDP growth in the first quarter to just 1 percent, down from a previous forecast of 2.2 percent, according to an S&P Global analysis.
“We expect most of the drag on U.S. growth to be in the first quarter, with a smaller hit in the second quarter and a rebound in the latter half,” said Beth Ann Bovino, U.S. chief economist at S&P Global.
But the impact could be more or less severe depending on the longevity and intensity of the outbreak, Bovina added.
“Along with the potentially devastating human toll, if the virus spreads further and lasts longer, the impact on virtually every economy could be far worse,” the report said.
“We will be watching the numbers on the health of the U.S. economy, determining whether, and by how much, the coronavirus infects investment demand and consumer spending,” it added.
The outbreak will chip away at growth by unsettling supply lines, disrupting tourism and decreasing commodity prices.
U.S. officials have maintained that the outbreak’s economic harm will be limited and predicted that activity would bounce back after the outbreak’s end.
The World Health Organization on Tuesday reported 42,708 confirmed cases of the virus in China and 1,017 fatalities. Another 393 cases have been reported in 24 other countries, with just one fatality.