All publications

No stone unturned: How COVID-19 is disrupting every industry

As the Covid-19 pandemic accelerates, hardly any global industry will be spared, according to our analysis. For Q1 2020, we register a record level of 126 sector risk-rating downgrades, the highest since we began monitoring in 2012. All these downgrades come from the direct and indirect impacts of Covid-19 on demand (5 out of 10 downgrades), profitability (4 out of 10) and liquidity (1 out of 10).

Emerging Markets: How to fight COVID-19 without ‘whatever it takes’

Emerging markets have registered record capital outflows over the past few weeks, triggering very strong currency depreciations and liquidity constraints for the weakest. Outflows have markedly accelerated over the past days and currencies have reacted accordingly, especially in commodity-exporting countries and those who implemented generalized lockdowns to fight the Covid-19 pandemic.

Germany: The calm before the labor market storm

In March, the German labor market appeared initially unaffected by the Covid-19 induced economic crisis, with unemployment posting a small decline compared to the previous month. But don’t be fooled by the latest figure, which looks like “the calm before the storm”.

COVID-19: Quarantined Economics

The COVID-19 outbreak has forced governments to put the world on an unprecedented pause, for at least three months, to flatten the contagion curve. Since January, the impact of the outbreak has unfolded from a China-centered supply shock, which sent shockwaves across global trade and disrupted supply chains, to an unraveling of financial markets as investors realized the unavoidability recession, to a violent demand shock hurting consumption and investment in China, Europe, and the U.S..

COVID-19 crisis in Europe to put 13,000 corporates at risk

In the context of the COVID-19 crisis, we estimate that turnovers of Eurozone companies could fall between -15% to -25% y/y at the peak of the crisis end of March. Operating margins could be indented by 1.0pp to 1.5pp.

Reading the recession in the PMI leaves

Eurozone March PMIs are “old news” for financial markets but they reiterate the historical  proportions of the economic setback currently underway, with many survey components reaching all-time lows. While a dramatic setback in Eurozone manufacturing was widely expected amid the COVID-19 crisis and already largely priced in by financial markets, today’s release still underlines the swiftness and severity of the resulting economic downturn.

The Fed goes unlimited. Really?

In response to the worsening of global macroeconomic conditions, increasing confinement measures taken by U.S. states, the uninterrupted fall of the equity market and  growing signs of liquidity stress, the Fed has  announced a new round of measures to keep financial markets operating smoothly, and to provide lending more directly to those sectors most in need.

ECB: From "whatever it takes" to "bring it on"

Last night, following an emergency meeting of its governing council, the ECB announced a new temporary asset purchase program worth EUR750bn (around 6% of Eurozone GDP) until the end of the year - or longer if needed - in response to the COVID-19 outbreak

COVID-19: A timid “whatever it takes” from policy makers across Europe

This week, policy makers stepped up, as containment measures could cost between 0.7pp to -3.0pp of GDP growth depending on the country and the severity of the lockdowns. Next to steps aimed at keeping a lid on contagion and boosting the resilience of national health systems, fiscal and monetary policy measures, from Italy to the UK and Germany, to the ECB, have been –or will– be announced in an effort to cushion the sharp economic contraction that is in the cards for H1 2020.

 

COVID-19: After a lost quarter, 75% of China is back

Chinese foreign trade growth in the first two months of 2020 was the lowest since 2016. The drop remains nonetheless small compared to the global financial crisis in 2009, when exports and imports slowed as much as -26.5% and -43.1% y/y in a month. In January and February 2020, Chinese exports and imports declined respectively by -17.2% and -4.0% y/y. The drop in exports was larger than expected and implies the weakest start of the year since 2016. The coming months could show further deterioration in China’s foreign trade, as containment measures across the world act as a major trade barrier.