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German economy ministry says that economic impact of coronavirus cannot be estimated at the moment

  
Analysis, Economy

Says that risks from abroad have increased due to the coronavirus outbreak

Germany
  • German economy is still experiencing a period of weakness
  • Industrial sector remains weak
  • But improved business sentiment suggests some stability in the coming months
  • Impact of virus outbreak on China and trade partners cannot be estimated currently
A couple of general commentary by German lawmakers after the Q4 GDP report earlier. The report saw German economic conditions stagnate in the final quarter of 2019 and the brighter outlook going into this year has been largely tempered by the virus outbreak.
As such, any expected recovery may have to be shelved and that may could mean softer economic conditions in the euro area the longer that the virus continues to impact the Chinese economy and global supply chains.

Moody’s weighs in on coronavirus economic impacts – could continue over next 3 quarters

  
Analysis, Economy
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Moody’s now:

  • says despite some turbulence, APC airports can weather coronavirus challenges
  • financial impact for APAC airports larger than suggested by passenger volumes at risk
  • says suggests travel between Asian destinations could be significantly affected over at least next 2-3 quarters due to coronavirus

Moody’s focused on airport/travel impacts – tourist movements are significant indeed in Asia (and elsewhere of course), business-related travel also.  There are significant flow-on effects from a reduced inbound flow of tourists, offset to some extent by locals otherwise taking holidays domestically.

S&P says coronavirus outbreak will cut 0.5% from Australia’s real GDP growth in 2020

  
Analysis, Economy
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The ratings agency a bit downbeat on Australia’s GDP, but on the bright side:

  • S&P says economic impact of coronavirus unlikely to negatively affect Australia’s sovereign rating
  • says short, temporary delay in balancing government budget unlikely to strain Australia’s creditworthiness

China GDP growth – S&P estimates coronavirus cut 0.7 % from year

  
Analysis, Economy

Ratings agency S&P on the virus impact on economic growth in China in 2020

The firm estimates coronavirus will lower China’s GDP growth by 0.7% to to 5.0% this year with a peak effect in Q1

  • expect a rebound in GDP to begin in Q3, all lost output recovered by the end of 2021

A subtraction of 0.3% is their estimate for the impact on global GDP growth in 2020

More:

  • New coronavirus a “high” risk to global credit conditions in Asia-Pacific and more particularly China
  • an “elevated” risk for rest of the world given lower infection and fatality rates outside China
  • speed and spread of coronavirus in past two months poses an emergent risk to global economy and credit
  • economic hit from coronavirus (including travel restrictions) to be felt most keenly in sectors exposed to Chinese household-related spending
  • expect a lag in lifting travel restrictions, return of more normal behavior by Chinese consumers, firms and to a lesser extent, Asia-Pacific

Ratings agency S&P on the virus impact on economic growth in China in 2020

Goldman Sachs downgrades 2020 China growth forecast to 5.2% from 5.8% previously

  
Analysis, Economy

Says the downgrade reflects a sharp deterioration in Q1 activity

China
  • But points to high degree of uncertainty surrounding this growth revision
  • Will review its forecast as developments evolve
  • Need to gauge the size of the economic drag from the virus outbreak
In other words, it is a tentative view with little in-depth modelling and forecasting being made at this stage – with possible revisions depending on developments surrounding the coronavirus outbreak in and outside of China.
I reckon that is the case for almost everyone in the world as we have to deal with the virus outbreak on a day-to-day basis with evolving opinions.
That said, the firm says that they remain overweight on EM currencies that offers both attractive nominal and real carry, even as they expect a near-term hit to global growth from the virus outbreak situation.
Among the currencies they favour are the RUB, MXN and IDR while they are funding these against underweight exposures to CAD and NZD.
The firm is also overweight in JPY as a hedge for risk-off sentiment during this time.
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