ISA Risk Alert: The Coronavirus Crisis (27th of March)
Daily Summary
The number of known cases of the coronavirus (Covid-19) around the world rose to nearly 540,000, while the number of deaths attributed to this outbreak has risen to more than 24,300. This represents a 117% increase in the number of cases and a 140% increase in the number of deaths from just seven days ago.
More than half of the fatalities from this pandemic have occurred in just two countries. Italy, with more than 8,200 fatalities, has seen the daily number of deaths from the coronavirus hover around 700 per day over the past week. Meanwhile, Spain has suffered nearly 4,400 deaths from this virus, with the daily number of deaths averaged nearly 700 over the past three days.
The economic impact of this crisis is beginning to be felt, as more and more indicators suggest that the downside risk to the global economy is significantly greater than had been originally feared. This, coupled with growing concerns that the lockdowns currently in place around the world could extend well into the summer, suggests that a global recession is now more likely than not for the year in 2020.
Countries that have not enacted severe lockdowns such as Japan, Singapore and Sweden have seen a sharp increase in the number of coronavirus cases in recent days, raising the likelihood that they too will be forced to enact many of the measures that have been adopted by much of the world in recent weeks.
Key Developments
An Unemployment Shock in the US: A record 3.3 million people in the United States filed for unemployment benefits last week, beating the previous record by a factor of nearly five. This could result in the unemployment rate in the US rising to more than 25% in Q2 2020, before it falls back.
All Eyes on China: As China has moved to lift some of its restrictions on travel and public gatherings, the world is watching closely. Unfortunately, new cases continue to be brought into the country, forcing Beijing to order a major reduction in the number of international flights.
Trend to Watch
The surge in the number of coronavirus cases in Turkey in recent days highlights the growing threat that this crisis poses to the Middle East, particularly those areas of the region that are ill-equipped to deal with such a crisis.
The Coming Days
All eyes will be on a series of economic data and survey releases in the United States and Europe in the coming days to help gauge the extent of the economic downturn in both places. The numbers are likely to make for very sober reading.