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Ex-Fed chair Janet Yellen: Coronavirus poses 'risk' to global economy, but previous epidemics had little influence

Information officer wearing protective mask, gloves and goggle, as prevention of novel coronavirus epidemic, gives directions to a passenger at international arrival gate of Bali Ngurah Rai International Airport in Kuta, Bali, Indonesia on February 4 2020. Indonesia has confirmed to halt any flight from and to Chinese mainland from February 5th until further notification due to prevent the spread of novel coronavirus into Indonesia.

The coronavirus has killed over 420 people and infected more than 20,000 in more than two dozen countries, leaving global leaders scrambling to mitigate the effects of the epidemics not only on their citizens but also on the global economy.

Former Federal Reserve chair Janet Yellen said during a Feb. 4 talk at George Washington University that while she sees the coronavirus posing a risk to the global economy, similar past epidemics only had modest long-term effects.

Marketplace host Kai Ryssdal served as moderator in a wide-ranging discussion, quizzing Yellen and David Malpass, president of the World Bank, about the coronavirus crisis, asking the economists if they feared the China-based epidemic could trigger a global economic shock.

The coronavirus is definitely "a potential influence on the global economy," Yellen said, adding that it seems certain to have a significant effect at least a quarter or two on Chinese growth. And because China is such a significant player in the global economy, there's bound to be "spillovers."

Malpass noted that he also sees coronavirus as a disruption to the global supply chain, saying that airlines' decision to halt flights to China is not only stopping people from traveling, but also blocking goods from being transported on those same flights.

"There remains an enormous amount of uncertainty about what will happen with the coronavirus and whether it will be contained," Yellen said, adding that while she's not an expert in this, it "clearly is a significant concern."

Yellen did point out that economists have looked at what's happened with past epidemics such as the SARS outbreak in 2003, and typically, there's a short-term impact. "Longer-term, it seems to have relatively little influence, and I think many observers are hoping that will be true this time," she says.

Malpass also remains hopeful that the long-term effects will be mitigated. "Technology has come a long way in finding things that can affect viruses, so we have some hope that science's response will shorten the full life cycle of this crisis," Malpass said.

Still, Yellen remains concerned. "To my mind, it is a clearly a source of uncertainty and risk to the global outlook."

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