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World Bank says Indonesia fires cost $5.2 billion in economic losses

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This picture taken on October 6, 2019 shows a firefighter battling a forest fire in Pekanbaru, Riau. Indonesia’s fires have been an annual problem for decades, though this year’s were particularly bad because of the dry weather.

Wahyudi | AFP | Getty Images

The total damage and economic loss from forest fires in Indonesia this year amounted to at least $5.2 billion, equal to 0.5% of gross domestic product, the World Bank said in a report on Wednesday.

The estimate was based on its assessment in eight affected provinces from June to October 2019, though analysts at the multinational bank said fires had continued to rage through to November.

“The forest and land fires, as well as the resulting haze, led to significant negative economic impacts, estimated at $157 million in direct damage to assets and $5.0 billion in losses from affected economic activities,” the World Bank wrote in the report.

Over 900,000 people reported respiratory illnesses, 12 national airports halted operations, and hundreds of schools in Indonesia, Malaysia and Singapore had to temporarily close due to the fires.

Drifting smoke at the height of the dry season in September triggered a diplomatic spat between Kuala Lumpur and Jakarta.

More than 942,000 hectares (2.3 million acres) of forests and lands were burned this year, the biggest since devastating fires in 2015 when Indonesia saw 2.6 million hectares burned, according to official figures. Officials said the spike was due to El Nino weather patterns lengthening the dry season.

The World Bank also estimated a 0.09 and 0.05 percentage points reduction in Indonesia’s economic growth in 2019 and 2020, respectively, due to the fires. Its growth forecast for Indonesia is 5% for 2019 and 5.1% for 2020.

The blazes were “manmade and have become a chronic problem annually since 1997” because fire is considered the cheapest method to prepare land for cultivation, the bank said.

Because about 44% of the areas burned in 2019 were in peatlands, carbon emissions from Indonesia’s fires were estimated to be almost double the emissions from the fires in the Brazilian Amazon this year.

The European Centre for Medium Range Weather Forecast estimated a total of 720 megatonnes of CO2 emissions came from Indonesian forest fires in January-November this year.

Longer-term effects of repeated fires were not included in this estimate, the World Bank said. Repeated haze exposure would reduce health and education quality and damage the global image of palm oil – an important commodity for Indonesia.

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Asia stocks decline as coronavirus death toll rises in China

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Stocks in Asia declined in Thursday morning trade as the death toll rises in China due to a mysterious pneumonia-like virus.

The Nikkei 225 in Japan slipped 0.75% in early trade while the Topix index also shed 0.54%.

Japanese trade data released Thursday showed exports falling more than expected in December. Japanese exports for December fell 6.3% in December as compared to a year before, data from country’s Ministry of Finance data showed. That was far lower than expectations of a 4.2% decrease expected by economists in a Reuters poll.

South Korea’s Kospi also saw losses as it declined 0.52%.

Meanwhile, shares in Australia declined in morning trade, with the S&P/ASX 200 falling about 0.3%. Investors will await the release of employment data in the country for December, set to be out at about 8:30 a.m. HK/SIN.

Overall, the MSCI Asia ex-Japan index traded around 0.1% lower.

Investor sentiment has taken a hit this week as the mysterious coronavirus that has infected hundreds in China spreads. The World Health Organization postponed a decision Wednesday over whether to declare the disease a global health emergency.

Currencies

The U.S. dollar index, which tracks the greenback against a basket of its peers, was last at 97.527 after seeing earlier highs above 97.65.

The Japanese yen traded at 109.72 per dollar after strengthening from levels above 110 yesterday. The Australian dollar changed hands at $0.684 after seeing highs above $0.688 earlier in the trading week.

Here’s a look at what’s on tap in the day ahead:

  • Australia: Jobs data for December at 8:30 a.m. HK/SIN

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Public transportation suspended in China city to combat coronavirus outbreak

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A man wears a mask while walking in the street on January 22, 2020 in Wuhan, Hubei province, China.

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Government officials in Wuhan, China are suspending all public transportation, including buses, trains, airplanes and ferries, to better combat the coronavirus outbreak, Reuters reported Wednesday, citing Chinese state media.

Officials are also asking citizens not to leave the city unless there are special circumstances. Additionally, people in public places will be required to wear masks to prevent exposure to the illness, local officials said.

The actions came after public health officials said earlier in the day that deaths from China’s new virus, which is believed to have started in Wuhan, rose to 17 with more than 540 cases confirmed.

Fears that the coronavirus could disrupt travel and commerce, and slow economic growth sent a chill through global risk markets, hitting Asian stocks hard, depressing copper and oil prices, and sending investors into safe havens, like U.S. Treasurys and German bunds.

Coronaviruses are a large family of viruses that usually infect animals but can sometimes evolve and spread to humans. Symptoms in humans include fever, coughing, and shortness of breath, which can progress to pneumonia.

Chinese authorities say many of the patients with the new illness had come into contact with seafood markets, suggesting the virus is spreading from animals to people. However, health officials say some “limited human-to-human transmission” occurred between close contacts.

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WHO postpones decision on declaring China coronavirus a global health emergency

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The World Health Organization postponed making a decision Wednesday on whether the mysterious coronavirus that has killed at least 17 people and sickened hundreds of others in China is a global health emergency.

WHO Director-General Tedros Adhanom Ghebreyesus said physicians need more information and he’s asked his committee, which held an emergency meeting in Geneva, Switzerland, Wednesday, to reconvene on Thursday.

“Today, there was an excellent discussion during the committee meeting, but it was also clear that to proceed we need more information,” Tedros told about 150 reporters on a conference call that was delayed for almost two hours while the committee met.

Tedros said the emergency committee on Wednesday was split on whether to designate the illness a global health emergency. He said WHO has researchers on the ground in China collecting data.

“The decision about whether or not to declare a public health emergency of international concern is one I take extremely seriously, and one I am only prepared to make with appropriate consideration of all the evidence,” Tedros said.

Two women wearing protective masks walk outside Beijing railway station in Beijing on January 22, 2020.

Nicolas Asrouri | AFP | Getty Images

Chinese authorities say many of the patients with the new illness had come into contact with seafood and meat markets, suggesting the virus is spreading from animals to people. WHO physicians said they’ve found evidence of human-to-human transmission within close contacts, citing family members, and within a health-care environment. They said the virus was stable and not showing any kind of unusual activity.

Physicians compared the outbreak to the 2003 outbreak of SARS, or severe acute respiratory syndrome, which had a short incubation period of 2 to 7 days and WHO officials said was less infectious than the flu. It took almost two months for SARS to spread to 456 people. The 2019 coronavirus has infected more than 540 people in less than a month.

WHO defines a global health emergency, also known as a Public Health Emergency of International Concern, as an “extraordinary event” that is “serious, unusual or unexpected.” The virus that emerged from Wuhan, China, over the holidays has spread throughout Asia, infecting people in China, Thailand, Taiwan, Japan and the Republic of Korea, according to WHO and Chinese state media.

The U.S. confirmed its first case on Tuesday, a Washington state man who was traveling in China, the Centers for Disease Control and Prevention said.

WHO doesn’t enact the emergencies lightly, according to Lawrence Gostin, a professor and faculty director of the O’Neill Institute for National and Global Health Law at Georgetown University. The international health agency has only applied the emergency designation five times since the rules were implemented in the mid-2000s.

The last time WHO declared a global health emergency was in 2019 for the Ebola outbreak in eastern Congo that killed more than 2,000 people. The agency also declared global emergencies for the 2016 Zika virus, the 2009 H1N1 swine flu and the 2014 polio and Ebola outbreaks.

Declaring an emergency doesn’t give the WHO extra funding or power, but it allows Tedros to ask countries not to impose travel or trade bans.

The meeting came a day after public health officials confirmed the first U.S. case of the virus and two days after officials said that the respiratory illness is capable of spreading from person to person. This weekend, the CDC and Homeland Security began screening people flying to the United States from Wuhan.

Chinese state media said Wednesday that government officials in Wuhan are suspending all public transportation, including buses, trains, airplanes and ferries, to better combat the coronavirus outbreak. Officials are also asking citizens not to leave the city unless there are special circumstances. Additionally, people in public places will be required to wear masks to prevent exposure to the illness, local officials said.

The new virus is similar to the flu and can cause coughing, fever, breathing difficulty and pneumonia.

This is a developing story. Please check back for updates.

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