Fears of coronavirus spreading have wiped out more than $3 trillion in value this week alone. For the first time since the outbreak erupted, the number of new coronavirus infections outside China exceeded new Chinese cases.

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Goldman Sachs has noted in a report that at a global level, the impact of virus outbreaks on economic activity is difficult to detect and isolate from other pre-virus trends.

Sectors such as airlines, cruise lines, and casinos are directly affected reflecting consumers’ reduced travel and entertainment expenses.

Also, any impact on China's economy has a direct repercussion across the world as China accounts for 17 percent of global GDP today as compared to 4 percent in 2003 when SARS hit.

According to Morgan Stanley, the longer COVID-19 lasts, the larger the impact will be on global growth. In particular, supply chain disruption is the key factor in assessing the impact on global growth.

The brokerage lays out 3 scenarios in Coronavirus Impact:

(1) Production in China resumes quickly post-February 10

(2) A gradual normalization in which migrant workers could face challenges in returning to work and transport logistics could take longer to return to normal

(3) An extended disruption in which the COVID-19 outbreak would peak in April, and production activities in China and global supply chains would remain affected for longer.

Given that production in China hasn't yet normalized, Morgan Stanley believes the global economy is tracking scenario 2, with growing risks of a transition to scenario 3.

Goldman Sachs, on the other hand, said that the growth impact will depend on the severity of the virus outbreak. If new infections slow sharply by the end

of March quarter and Chinese workers return to the factories as encouraged by the central government, China GDP growth is likely to be somewhere between the benign and severe cases.

However, it added that if infections continue to grow significantly into June-quarter on a global basis and Chinese workers return to the factories at a very slow pace, the recovery will start later, more supply chains will be disrupted and impact on global growth will be more significant.

It also believes that the policymakers will probably ease policy further to counter the impact of the epidemic.

As per the earlier trend, US growth rates weakened modestly around the recent disease epidemics but rebounded the following quarter, noted Goldman Sachs.

Foreign sales account for about 30 percent of aggregate S&P 500 revenues, while direct China revenues are only 2 percent. Yet that direct exposure likely understates China’s potential impact, Goldman Sachs further noted.

China is a key import destination for many European, other Asian and emerging countries with which US firms transact. It is also a hub of global supply chains that could crimp sales and encumber the production of US firms.

Just in the December-quarter, Goldman Sachs stated, that nearly 37 percent of S&P companies reporting for Q4 2019 have cited COVID-19 in some form during their earnings calls.

About a third of these firms said that it was too early to measure the impact of the virus, while 25 percent included some impact from the virus in their guidance or modified their guidance lower to account for the virus, it added.