Virus cost may top $4 trillion; French car insurance cheaper
The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. Following are developments on Friday related to the global economy, the work place and the spread of the virus.
COSTS MOUNT: The pandemic will cost the global economy as much as $4.1 trillion, or nearly 5% of all economic activity, according to new estimates from the Asian Development Bank.
The regional lender said Friday that growth in developing Asia would likely fall to 2.2% in 2020, more than halving last year's growth of 5.2%. China, the region’s biggest economy, experienced double-digit contractions in business activity in January-February and will likely see growth fall to 2.3% this year. That's compared with 6.1 last year, already a three-decade low, the ADB said. China's losses from shutdowns and other costs due to the pandemic could add up to $692 billion if containment efforts drag on. But the ADB estimated that growth would bounce back next year to more than 7%.
In Europe, a key gauge of activity in manufacturing and services fell to a record low, suggesting an annualized drop in GDP of about 10% for the 19-country eurozone.
SMALL BUSINESS, BIG HELP: China has promised to ensure that entrepreneurs, who are the country's economic engine, get the loans they need to recover from the pandemic. The central bank plans to make 1 trillion yuan ($140 billion) available to commercial banks for lending to small and medium-size enterprises, most of which are privately owned.
The ruling Communist Party began easing travel and other restrictions in early March to revive the world’s second-largest economy after declaring victory over the outbreak. The central bank also said this week local governments will be allowed to issue more bonds to finance spending on public works construction and other projects meant to shore up economic growth.
In Britain, the government is broadening the scope of an emergency loans scheme for businesses, enabling a wider range of small businesses to tap a 330 billion-pound fund of loan guarantees. So far, only 1,000 out of 130,000 loan inquiries have been approved.
HEAVY INDUSTRY: Toyota is halting production at five of its 18 plants in Japan, because of sluggish overseas demand. The stoppage will last three days for most of the plants, but one plant will close until mid-April.
The affected plants produce vehicles for export, including Lexus luxury models and the Prius hybrid. Other Japanese automakers, such as Honda Motor Co., have also suspended production as the outbreak slams demand. Toyota has reported 19 COVID-19 infectiosn among workers, including four in the U.S. and two in Japan, spokeswoman Kayo Doi said.
The U.S. auto industry is completely shut down.
Germany’s auto industry association says new car registrations in the country dropped 38% in March compared with a year earlier, the steepest drop it has measured since German reunification three decades ago.
The German Association of the Automotive Industry said that 215,100 new vehicles were registered last month. Over the whole first quarter, 701,300 cars were registered – a 20% year-on-year drop. Restrictions on public life in Germany started kicking in in mid-March and automakers have largely suspended production.
The association said that March production fell 37% and the number of cars exported dropped 32%.
SOUND OF ONE CAR CRASHING: Even pandemics have silver linings. Streets are largely empty, the number of traffic accidents are falling sharply, and so is the cost of auto insurance, at least in France.
The MAIF, one of France’s largest auto insurers, said Friday that traffic accidents are down between 75% and 80% since the country largely shutdown.
MAIF plans to refund some of the savings from a 100 million-euro ($108 million) drop in traffic-accident payouts. It said the rebate to clients with vehicle insurance will likely be about 50 euros ($54) each. Motorists will be given the option to donate the refunds to medical personnel, vaccine research or charity.
MARKETS: Global stock markets fell Friday after soaring U.S. job losses tempered enthusiasm about a possible deal to stabilize oil prices amid anxiety over the global economic decline due to the pandemic. On Wall Street, futures for the benchmark S&P 500 index and the Dow Jones Industrial Average were off 1%.
ROUNDING IT OUT: The U.S. typically has a unique response to crisis, and this one is no different.
Firearm sales spiked 85% last month compared with the March last year, according an analysis of the FBI's National Instant Criminal Background Check System by Small Arms Analytics and Forecasting.
The laws of supply and demand also apply to arming up, of course, and the cost of adding guns the the shopping list will cost you.
“Much of the industry’s inventory will have been depleted, so that we anticipate that weapons and ammunition prices increased as well,” said Jurgen Brauer, SAAF's chief economist.
Data on prices will be released soon.