Archives of “Pandemic” tag

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India’s growth outlook worsens amid fears of extended lockdown

  
Analysis, Economy
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Growth forecasts for India’s economy, which before the Covid-19 global pandemic was projected to post a mild recovery, are getting bleaker as the government weighs whether to extend the 21-day nationwide lockdown.

Now, UK research consultancy Capital Economics projects India’s growth will slow to just 1 per cent in this fiscal year, the lowest pace in 41 years. “Coronavirus and measures to contain it will ravage the economy over the coming months,” said Capital Economics economist Shilan Shah. Fitch ratings agency, meanwhile, has slashed its 1920-21 growth projection to 2 per cent, a 30-year low.

On the domestic front, household spending and investment “is likely to collapse, with only a ramping up of government spending providing any support” while external demand will “weaken drastically too,” Shah said. The central bank’s responded with aggressive monetary loosening, but large-scale fiscal stimulus is also needed to prevent the drastic slowdown from “morphing into a contraction in annual output,” Shah said.

Capital Economics expects the lockdown, slated to end April 14, to be extended for up to three months and if so, “large parts of the manufacturing, construction, transport, retail, leisure and recreation sectors will grind to a halt.” US consultancy Boston Consulting Group also forecasts a protracted shutdown which it says India will only start lifting between end-June and second week of September.

The lockdown’s aimed at averting a catastrophic explosion of coronavirus cases — an Indian Council of Medical Research study suggests one unquarantined Covid-19 patient can infect 406 people in 30 days. But the shutdown’s also caused unprecedented disruption to India’s consumption-driven economy which even before the coronavirus shock was growing at six-year lows. Growth projections for 2019-20 range from around 4.5 per cent to 5.0 per cent. Gross Domestic Product growth for the 2019-20 third quarter, set for publication Friday, will be around 4.5 per cent, slightly ahead of the 4.3 per cent logged in the year-ago period, helped by a healthy crop output, economists say.

“The challenge for India versus its peers is starker if infections spread rapidly considering the higher density of population per capita and weaker health infrastructure,” UBS economist Tanvee Gupta Jain said. India looks to be a long way from the goal of “flattening the coronavirus curve” and preventing a surge that swamps the nation’s weak healthcare system. It took 59 days to reach the first 1,000 confirmed cases. But in just two days, the number of cases rose from 3,000 to 4,000 — and deaths from 75 to 100. The death toll in India stood at 111 Tuesday and coronavirus cases at 4,281, a 704 jump in 24 hours. Union Minister Prakash Javadekar said a decision on whether to extend the shutdown “will be declared at the right time.”

States favour shutdown extension

Many states are urging the government to extend the shutdown with Telangana’s chief minister K Chandrashekar Rao saying, “Economic recovery can come later. In the given situation, with India’s poor health infrastructure and big workforce, we have no other weapon.” India could face 100,000 to 1.3 million confirmed coronavirus cases by mid-May if the trend continues, according to a March 25 report by the COV-IND-19 Study Group. Already, tens of thousands of urban migrant workers have returned to their villages, potentially spreading the virus deep in India’s hinterland. (more…)

ECB announces a new coronavirus pandemic response, EUR750bn purchase program

  
  Analysis
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European Central Bank announcement

  • €750 billion pandemic emergency purchase programme (PEPP)
  • a new temporary asset purchase programme of private and public sector securities to counter the serious risks to the monetary policy transmission mechanism
  • purchases will be conducted until the end of 2020 and will include all the asset categories eligible under the existing asset purchase programme
  • says for the purchases of public sector securities, the benchmark allocation across jurisdictions will continue to be the capital key of the national central banks.
  • says to the extent that some self-imposed limits might hamper action that the ECB is required to take in order to fulfil its mandate, the governing council will consider revising them to the extent necessary
  • says at the same time, purchases under the new PEPPwill be conducted in a flexible manner. this allows for fluctuations in the distribution of purchase flows over time, across asset classes and among jurisdictions.
  • says a waiver of the eligibility requirements for securities issued by the Greek government will be granted for purchases under PEPP.
  • says the governing council is fully prepared to increase the size of its asset purchase programmes and adjust their composition, by as much as necessary and for as longas needed
  • the governing council will terminate net asset purchases under PEPP once it judges that the coronavirus covid-19 crisis phase is over, but in any case not before the end of the year
  • says to expand the range of eligible assets under the corporate sector purchase programme (CSPP) to non-financial commercial paper, making all commercial papers of sufficient credit quality eligible for purchase under CSPP
  • says the governing council of the ECB is committed to playing its role in supporting all citizens of the euro area through this extremely challenging time

Summary Headlines via Reuters

ES futures have flipped around to positive on this supportive announcement after losing ground earlier on the reopening for evening trade.
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There are plenty of responses to these sorts of actions along the lines that they will not ‘cure’ the coronavirus. Correct. Central banks are applying band-aids to mitigate (hopefully) the impacts upon econiomies, doing what they can do. Don’t expect Lagarde, Powell, et al find a miracle medical cure, K?

The coronavirus will be a pandemic, here are 8 things to do

  
Analysis, Education
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Here is a piece from CNN on “Covid-19 will become a pandemic” and “we must do eight things “.

Some of the 8 seem pretty ****ing obvious, eg 4. Improve medical care and prevention of Covid-19.
Well, yeah, OK. Here is the link for the other 7.
#9 is to cut down on sugar, diabetes is gonna kill way more folks than this infection (my 2c)

Is the coronavirus’ impact on financial markets overblown?

  
  Analysis
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A look at the key question in markets right now

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The Coronavirus continues to see an outbreak globally with the latest estimates putting the death total over 900 persons. With fear continuing to spread and millions disrupted, financial markets have certainly been impacted.

Typically, most problematic geo-political or economic events have always managed to yield some material effect on markets. This was seen earlier this year with the rising tensions between the US and Iran.

However, the Coronavirus is itself an entirely different animal, whose impact is far more globally reaching. This article will explore how the virus has correlated to financial markets and which instruments should be looked at.

How does the virus affect global markets?

(more…)

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