The economic impact of the COVID-19 pandemic will be dominated by releases this week by China and the International Monetary Fund.
As well, figures from the US, Europe, Japan, India, and Australia will help flesh out the picture of the damage the virus has and is doing to economies large and small.
While it will be the number of new COVID-19 cases, lockdowns, infections and deaths that command much of the attention we will also start getting more accurate data on the impact of the virus and of the policy responses have had and are having on economies large and small.
The US now is the global focus so far as the virus is concerned with still rising infection numbers and deaths along with the UK, Italy, and Spain. In Asia, there seems to be a worrying return of the virus in Singapore, South Korea, Japan and parts of China.
China releases its March trade data today which will show the full extent of the slump in activity and follows that up on Friday with the first quarter GDP release as well as data on industrial production, investment, and retail sales. Car sales data will be released along with bank ending data.
The AMP’s chief economist, Dr. Shane Oliver says Friday’s growth report could a quarter on fall of 10% (QoQ) in the three months to March or an annual rate of 6% (YoY). That, he said will reflect the impact of the shutdown from late January into March.
“Meanwhile, expect to see an improvement in momentum in activity data for March as the shutdown eased allowing a gradual recovery with industrial production down 6.4%yoy but up from a fall of 13.5%yoy over January and February, retail sales down 6.5%yoy but up from -20.5% and investment down 14.5% but up from -24.5%.
He says today’s trade data “is likely to show continuing weakness in exports and imports.”
Markit economists said in the review of the coming week that China’s “industrial production, retail sales, investment and trade for March …. ill help gain some sense of the extent to which China’s economy and its supply chains have managed to recover after a marked drop in activity in February, as virus containment measures start to ease.”
Elsewhere this week in Asia trade numbers for Asia, notably for Japan, India, and Indonesia will also be updated for March.
Tonight the IMF releases its first World Economic Outlook (WEO)) for 2020 and it’s going to be the gloomiest for decades. Besides the global report, smaller reports for each member nation and region will also be released. That report will be out at 10.30 pm Sydney time.
Later in the week, the IMF releases its global financial stability report which will also be gloomy given the huge battering financial systems around the world have taken from the COVID-19 and the policies governments and central banks have introduced to try and offset the impact, especially from the mass lockdowns and social distancing rules.
Late last week, IMF head, Kristalina Georgieva warned that all but a handful of the Fund’s 189 member states will suffer falling standards of living this year as a result of the worst global economic crisis since the 1930s.
Ms. Georgieva said the COVID-19 pandemic means the IMF’s new forecasts for the world economy were going to be grim – and there was a risk that the impact could be even worse than currently expected. She said more than 170 countries will suffer a reversal of living standards in 2020.
Three months ago in an update to the 2019 WEO, the IMF was predicting that the global economy would grow by 3.3% in 2020, but that’s been overtaken by the spread and damage caused by COVID-19.
In the US, we can expect sharp falls in March data for retail sales, industrial production and home builder conditions (all out on Wednesday) and similarly sharp falls in March housing starts and permits and another big rise in jobless claims (all on Thursday).
The AMP’s Dr. Oliver says the New York and Philadelphia regional manufacturing conditions surveys for April are also likely to be very weak.
The flow of March quarter earnings reports will start this week and are likely to show a sharp fall as shutdowns impact with negative/uncertain outlook comments
In Australia its the March labour force report on Thursday that will be the focus with economists forecasting a sharp rise in unemployment of 50,000 or more. Dr. Oliver says we can expect the jobless rate to rise to at least 5.5% from February’s 5.1%.
As well quarterly production and sales reports start flowing this week from the likes of Rio Tinto, (its first quarter), Whitehaven Coal, Woodside Petroleum and OZ Minerals.
The reports from the energy companies such as Woodside, Whitehaven and next week, Santos and Beach, will not make pleasurable reading for shareholders.
