covid-19: gauging the pandemic · 2020-03-05 · march 2020 5 » covid-19 baseline scenario (middle...

March 2020 1March 2020

COVID-19: Gauging the Pandemic

March 2020 2

Gauging the Pandemic1

March 2020 3

China (80,152)S. Korea (5,186)Italy (2,502)Iran (2,336)Diamond Princess (706)Japan (293)France (212)Germany (196)Spain (165)Singapore (110)USA (109)Other (903)

A Global Pandemic

Sources: Worldometer, Moody’s Analytics

Coronavirus cases by location as of Mar 3, 2020

March 2020 4

Mumps

Avian flu

Chickenpox

Spanish flu

Ebola

Measles

PolioSARS

Seasonal flu

Smallpox

Swine flu

0.0

0.1

1.0

10.0

100.0

0 2 4 6 8 10 12 14 16

Contagious and VirulentX-axis: Contagiousness (R0), Y-axis: Mortality rate (%, log scale)

Sources: CDC, WHO, Various studies, Moody’s Analytics

COVID-19

Highly contagious

Very deadly

March 2020 5

» COVID-19 Baseline Scenario (Middle of the distribution of possible outcomes)

– 1 million global infections, new infections peak in March, 1-2% mortality rate, 3-4% hospitalization rate, infections abate by June.

» COVID-19 Downside Scenario (45% probability actual outcome is worse)

– 1-2 million infections, new infections peak in March,2% mortality rate, 4-5% hospitalization rate, infections abate by June.

» COVID-19 Pandemic Scenario (35% probability actual outcome is worse)

– 3-4 million global infections, new infections peak in April,2-3% mortality rate, 5-6% hospitalization rate, infections abate by July.

COVID-19 Scenarios

March 2020 6

Direct Global Impact2

March 2020 7

Body Blow to the Chinese Economy…

0.00–0.01%0.01–0.04%0.04–0.14%0.14–0.29%

N/A

XI

TI

QI

SI

GNFU

ZH

SD

HI

JLLIIM

GXYU

GZ HU JI

AN

SA

HB

SXGAJA

HE

HA

SH

BETJ

CH

NI

HN

Cumulative lost output, % of Chinese GDP

Lost output as of March 3=1.3 ppt

Source: Moody’s Analytics

March 2020 8

20

25

30

35

40

45

50

55

60

08 09 10 11 12 13 14 15 16 17 18 19 20

Official manufacturingOfficial nonmanufacturingCaixin manufacturing

…That Has Been Slow to RecoverChina PMI, 50=neutral

Sources: National Bureau of Statistics, Markit, Moody’s Analytics Data ends Feb 2020

March 2020 9

3

4

5

6

7

8

9

10

11

07 08 09 10 11 12 13 14 15 16 17 18 19 20

Global Trade Has Been DisruptedSouth Korea imports from China, $ bil

Sources: Ministry of Trade, Moody’s Analytics

March 2020 10

70

75

80

85

90

95

100

105

1/1/2020 1/13/2020 1/25/2020 2/6/2020 2/18/2020 3/1/2020

Copper WTI

Commodity Prices Take It on the ChinCommodity prices, Dec 31, 2019=100

Sources: EIA, LME, Moody’s Analytics

March 2020 11

Fragile Collective Psyche3

March 2020 12

1.0

1.2

1.4

1.6

1.8

2.0

29

30

31

32

33

34

35

Jan-20 Feb-20 Mar-20

Wilshire 5000, $ tril (L)

10-yr Treasury Yield (R)

Global Investors Are Skittish…

Sources: Wilshire 5000, Federal Reserve, Moody’s Analytics

March 2020 13

0

10

20

30

40

50

16 17 18 19 20

Business sentiment diffusion index, net % of responses


Brexitvote

Trump elected

Trade war

Governmentshutdown

Tax cuts

…and Businesses On Edge

Trade truce

March 2020 14

0

20

40

60

80

100

3/8/2015 3/8/2016 3/8/2017 3/8/2018 3/8/2019

Quarantine Virus Pandemic

Consumer Sentiment Is Fragile…Google search term (worldwide), 100=peak interest

Sources: Google Trends, Moody’s Analytics

Zika virus outbreak

March 2020 15

111

112

113

114

115

116

1-Jan-20 15-Jan-20 29-Jan-20 12-Feb-20 26-Feb-20

…And Has Begun to SlumpMorning Consult's Index of U.S. Consumer Sentiment

Sources: Morning Consult, Moody’s Analytics

March 2020 16

The Policy Response4

March 2020 17

Asian Policymakers Aggressively Respond

Fiscal policy Monetary policy Measures prior to Jan 23

China Government tax relief and subsidies LPR cuts, liquidity injectionsVarious targeted measures including RRR cuts, liquidity injections, increased infrastructure spending via local government bond issuance

Japan No No US$120 bil fiscal stimulus announced in Dec

South Korea No Rate cut in Feb Budget approved in Dec, deficit forecast to widen by 9.1% y/y

Indonesia No Rate cut in FebBudget approved in Sep, government spending to rise by 3% y/y in 2020

Hong Kong Record budget deficit for 19-20 and 20-21 announced

SingaporeBudget deficit forecast to widen to 2.1% of GDP in FY2020, its largest in a decade No

Philippines No Rate cut in FebBudget approved in early Jan, for government spending to rise by 12% y/y, with infrastructure the focus

Malaysia No No Rate cut in Jan

Thailand Yes Rate cut in FebCurrent budget approved on Feb 26 after being delayed since Oct, government spending to rise by 7% y/y

Source: Moody's Analytics

Stimulus in Asia Since COVID-19 Outbreak in January

March 2020 18

Federal Reserve on High Alert

Sources: Federal Reserve, Moody’s Analytics

Target fed funds rate, change, bps

-100

-75

-50

-25

0

Oct-98 Jan-01 Sept-01 Aug-07 Jan-08 Oct-08 Mar-20

Intra-meeting Next scheduled meeting

Forecast

March 2020 19

Small U.S. Fiscal Policy Response (So Far)

Sources: CBO, Moody’s Analytics

Federal discretionary nondefense funding for emergencies, FY, $ bil

0

30

60

90

120

12 13 14 15 16 17 18 19 20

COVID-19

March 2020 20

Global Outlook5

March 2020 21

Diminished Growth Prospects in 2020…2020 GDP growth forecast, Mar baseline


Near or above potentialBelow potentialIn recession

March 2020 22

…And a Significant Risk of Recession2020 GDP growth forecast, COVID-19 Pandemic scenario


Near or above potentialBelow potentialIn recession

March 2020 23

Global Recession Under Pandemic ScenarioReal GDP growth, % change annual rate

2020Q1 2020Q2 2020Q3 2020Q4 2019 2020

World January base 2.7 2.9 2.7 2.6 2.5 2.6February base 1.4 3.6 3.1 2.6 2.5 2.4March prelim base 1.0 2.2 3.6 2.7 2.4 2.0Pandemic -1.0 -3.5 -0.9 1.4 2.4 -0.1

United States January base 1.5 2.2 1.5 1.2 2.3 1.8February base 1.2 1.8 1.8 1.4 2.3 1.7March prelim base 1.0 0.8 1.8 2.1 2.3 1.5Pandemic -0.8 -2.9 -2.0 -0.2 2.3 -0.2

China January base 7.2 6.6 5.5 5.8 6.1 6.2February base -0.2 11.5 8.2 5.8 6.1 5.4March base -0.8 5.2 11.5 5.8 6.1 4.5Pandemic -1.8 -8.7 0.0 6.4 6.1 0.1

Brazil January base 2.0 2.4 2.5 2.6 1.1 2.2February base 2.0 2.4 2.5 2.6 1.1 2.2March prelim base 1.6 2.0 2.5 2.6 1.1 2.0Pandemic -6.1 -6.8 -1.6 1.6 1.1 -2.2

United Kingdom January base 1.2 1.1 1.1 1.1 1.3 1.0February base 1.1 1.3 1.1 1.1 1.3 1.0March base 0.7 0.9 1.2 1.0 1.4 0.8Pandemic 0.7 -0.8 -0.2 0.3 1.3 0.3

Euro Zone January base 1.4 1.5 1.8 1.4 1.2 1.3February base 1.7 1.6 1.7 1.4 1.2 1.3March prelim base 1.1 1.2 1.3 1.3 1.2 1.0Pandemic -0.5 -1.3 -0.1 0.8 1.2 -0.1

March 2020 24

Supplemental Charts6

March 2020 25

Death Rate by Age

Sources: Chinese Center for Disease Control and Prevention, Moody’s Analytics

0 2 4 6 8 10 12 14 16

0-910-1920-2930-3940-4950-5960-6970-79

80+

Case fatality ratio

March 2020 26

Death Rate by Health Condition


0 2 4 6 8 10 12

No pre-existingconditions

Cancer

Hypertension

Respiratory disease

Diabetes

Cardiovasculardisease

Case fatality ratio

March 2020 27

Death Rate by Gender


0.0 0.5 1.0 1.5 2.0 2.5 3.0

Female

Male

Case fatality ratio

March 2020 28

COVID-19 Is a Pernicious Economic Shock


Price

OutputQ

P

S

D

S1

D1

P1

Q1

March 2020 29

Lost Output

0.1–0.2%0.2–0.9%0.9–3.3%3.3–9.0%

N/A

XI

TI

QI

SI

GNFU

ZH

SD

HI

JLLIIM

GXYU

GZ HU JI

AN

SA

HB

SXGAJA

HE

HA

SH

BETJ

CH

NI

HN

Cumulative lost output, % of province GDP


March 2020 30

0 5 10 15 20 25 30

VietnamThailand

PhilippinesSingapore

AustraliaIndonesiaMalaysiaCanada

U.S. Travel and tourism as direct% of GDPChina as share of totaltourist arrivals by country, %

Exposure to Chinese Tourism

Sources: World Travel and Tourism Council, National statistics offices, Moody’s Analytics

March 2020 31

0 5 10 15 20 25 30

TaiwanVietnamMalaysia

KoreaThailand

SingaporePhillipines

AustraliaIndonesia

CanadaHong Kong

U.S.India

Asia Exposed Through Supply ChainExports to China, % of GDP, 2018

Sources: IMF, National statistics offices, Moody’s Analytics

March 2020 32

-1.0

-0.8

-0.6

-0.4

-0.2

0.0

U.S. EU China Japan

EMEAEM LatAmEM AsiaDevelopedDirect

Significant Global Knock-On EffectsPpt contribution to global GDP growth from 1% deceleration in GDP growth of specified country


March 2020 33

-2

0

2

4

6

8

10

19Q1 19Q3 20Q1 20Q3 21Q1 21Q3

Jan baseFeb basePandemic

China’s Economic Outlook China real GDP growth, % change yr ago

Sources: Government of China, Moody’s Analytics

March 2020 34

-2

-1

0

1

2

3

4

5

19Q1 19Q3 20Q1 20Q3 21Q1 21Q3


Global Economic OutlookGlobal real GDP growth, % change yr ago


March 2020 35

-1.5-1.0-0.50.00.51.01.52.02.53.03.54.0

19Q1 19Q3 20Q1 20Q3 21Q1 21Q3


U.S. Economic OutlookU.S. real GDP growth, % change yr ago

Sources: BEA, Moody’s Analytics

March 2020 36

Q&A

Email us at [email protected]

March 2020 [email protected]

West Chester, EBA-HQ+1.610.235.5299121 North Walnut Street, Suite 500West Chester PA 19380USA

New York, Corporate-HQ+1.212.553.16537 World Trade Center, 14th Floor250 Greenwich StreetNew York, NY 10007USA

London+44.20.7772.5454One Canada Square Canary Wharf London E14 5FAUnited Kingdom

Toronto+1.416.681.2133200 Wellington Street West, 15th FloorToronto ON M5V 3C7Canada

Prague+420.22.422.2929AFI ButterflyB1 3rd Floor, Pernerova 691/42186 00 Prague 8 - KarlinCzech Republic

Sydney+61.2.9270.8111Level 10, 1 O'Connell StreetSydney, NSW, 2000Australia

Singapore+65.6511.44006 Shenton Way#14-08 OUE Downtown 2Singapore 068809

Shanghai+86.21.6101.0172Unit 2306, Citigroup Tower33 Huayuanshiqiao RoadPudong New Area, 200120China

Contact Us: Economics & Business Analytics Offices

March 2020 38

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covid-19: gauging the pandemic · 2020-03-05 · march 2020 5 » covid-19 baseline scenario (middle...

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