ISA Risk Alert: The Coronavirus Crisis (20th of March)
Daily Summary
- The number of known cases of the coronavirus (Covid-19) rose to nearly 250,000 globally, while the number of deaths attributed to this outbreak has risen to more than 10,000. Worse, both numbers are expected to more than double over the next week.
- Fears mounted that there was nothing European countries could do to stem the spread of the outbreak in that region, as the number of coronavirus cases and fatalities continued to rise at a very worrying pace. The eleven countries and territories with the highest number of coronavirus cases on a per capita basis are all located in Europe.
- The new of active cases in the United States (14,024) continued to rise sharply in recent days, with major outbreaks in and around New York City and Seattle being the locations of half of the current known cases on the US. The US is expected to surpass Italy in terms of the number of new cases per day, although its number of cases per capita is just 6% of that of Italy.
- The Chinese economy slowly continued to come back online in recent days, raising hopes that supply chain disruptions could be reduced in the coming weeks. However, disruptions in Europe, North America and other regions are now a distinct possibility, potentially extending these supply chain troubles for months to come and causing major supply-side problems for many industries.
Key Developments
Italy in Despair: The hoped-for slowdown in the number of new cases of the coronavirus in Italy did not materialize in recent days as the number of new cases there continued to rise rapidly. Now, poorer areas of Italy face the prospect of a surge in the number of cases.
A Deep Recession Looms: Recent economic indicators point to the likelihood of the global economy falling into a deep recession in the first half of this year. Moreover, should the outbreak persist in the coming months, or surge again later this year, a year-long deep recession is possible.
Trend to Watch
The coronavirus has largely spared India and the rest of South Asia so far. However, the number of cases in that region, which is home to two billion people, is forecast to rise dramatically in the coming weeks and is likely to cause major disruptions there.
The Coming Days
A number of major economies will release their latest manufacturing and service sector sentiment surveys early next week and this should give us a clearer picture as to the actual impact that this crisis is currently having on the global economy.