The disruption caused by the virus outbreak in China will have an effect on the US economy, but the magnitude of the hit remains uncertain, a White House economist said Monday.

With the death toll worldwide reaching 2,600, the official cautioned that other illnesses such as influenza are responsible for far more fatalities annually than the COVID-19 virus that originated in central China.

Global stock markets were reeling Monday amid renewed fears about the spread of the virus, with Italy, Iran and South Korea emerging as new hotspots.

"The real threat, I think, is obviously the coronavirus. We don't know yet, but we're taking a wait and see approach," said Tomas Philipson, acting director of the White House Council of Economic Advisors.

Italy has emerged as a new hotspot for the novel coronavirus outbreak along with Iran and South Korea
Italy has emerged as a new hotspot for the novel coronavirus outbreak along with Iran and South Korea AFP / ANDREAS SOLARO

"That doesn't mean that economic effects from all the shutdowns in China won't have any impact. They will," he told a conference of the National Association for Business Economics.

With the outbreak showing little sign of easing, investors are increasingly concerned it could have a much longer-term impact on the world economy, but like Philipson, economists say it is too soon to calculate.

The International Monetary Fund has said the best case would be for a short, sharp decline in growth in China, followed by an equally sharp recovery.

Numerous companies, notably iPhone maker Apple, have warned that earnings will be hit from the shutdown of the supply chain out of China.

Philipson said the US economy remains resilient to health impacts, such as the 40,000 deaths from the flu in an average year.

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