‘Virus cost to global economy may top $4.1 trillion’

The outbreak of the coronavirus has dealt a shock to the global economy with unprecedented speed. 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 (ADB).

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.

In Europe, a key gauge of activity in manufacturing and services fell to a record low, suggesting an annualised drop in GDP of about 10% for the 19-country eurozone.

Airlines face a Friday deadline to apply for a share of $25 billion in federal grants to cover payroll costs for the next six months. American and Southwest have indicated they will apply while other carriers are hesitating. A provision of the aid could allow the US government to take an equity stake in airlines that seek grants or loans.

But all airlines are hemorrhaging. The number of travelers screened Thursday at airports nationwide was 124,000, a 95% drop from the same day last year.

Toyota is halting production at five of its 18 plants in Japan as sales evaporate. 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.

The US 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.

Thailand’s famous resort island of Phuket has issued an order to close to all hotels.

Hotels currently hosting guests may stay open until they leave, but must report their number and names to the district offices so their health can be screened. Any guest with COVID-19 symptoms will be brought to state-designated facilities for monitoring.

All land and sea entry and exit points in Phuket were closed this week. The island draws more than 10 million visitors annually.

The US 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.

Separately, China’s central bank said on Friday it was cutting the amount of cash that small banks must hold as reserves, releasing around 400 billion yuan ($56.38 billion) in liquidity to shore up the economy, which has been badly jolted by the coronavirus crisis.

The latest stimulus move comes as the world’s second-largest economy looks likely to shrink for the first time in at least 30 years. Hopes for a quick recovery are being soured by the rapid spread of the disease worldwide, crushing global demand. “The deterioration of the global economy is bound to have a great impact on China’s economy, which requires that China’s policy should be further loosened and be more flexible,” said Yan Se, chief economist at Founder Securities.

The People’s Bank of China said on its website it will cut the reserve requirement ratio (RRR) for those banks by 100 basis points (bps) in two equal steps, the first effective as of April 15 and the second as of May 15.

China has about 4,000 small and mid-sized banks. The latest cuts would lower their RRR to 6%.

In addition, the interest rate on financial institutions’ excess reserves with the central bank would be reduced to 0.35% from 0.72%, effective April 7, the PBOC said. The RRR cut was flagged by the cabinet on Tuesday along with other support measures as Beijing tries to cushion the economic blow from the pandemic, which is fanning worries about heavy job losses.

Agencies