Transactions. Restructuring. Transformation. Financial Engineering.

COVID19 Global economy newsletter April 9, 2020

Politico/ Number of days that had passed between the 3rd death caused by Covid-19 in each country and the Implementation of each measure in that country.

Fathom Consulting & Refinitiv/ Latest recession watch.

• The coming two weeks are critical, as they will tell us whether we have passed the point of inflection in the spread of the disease across the major economies.

• The economic effects are terrible everywhere, but are likely to be even worse in emerging economies: that is the theme of our webinar this afternoon.

• Despite all that, there remains (for now) a material chance of a V-shaped recession. • Some early indications of how the post-virus world will have been reshaped: trouble in the euro area,

increased polarisation between the US and China.

The fan chart below shows the probability distribution of forecast for the level of GDP, not the growth rate that it would normally display. That is because the convulsion in the growth rate is now so extreme that it makes the fan chart difficult to read. The chart also illustrates the point forecasts consistent with the centreof the distribution for each of three risk scenarios, the V, the U and the L shapes. In the V-shape, we are back to the pre-crisis level of global GDP by the end of next year. But in the L-shape, we remain below that level throughout the forecast period.

SpotData/ Electricity consumption suggests that Central Europe is doing better than Western Europe. Data from the European Network of Transmission System Operators (ENTSO-E) show that in the last week of March, power consumption was 10-20% lower year-on-year in France, Italy and Spain and about 3-8 per cent lower year-on-year in Poland, the Czech Republic and Hungary.

OECD/ Covid-19 Health spending as % of GDP.

IHS Markit/ Week Ahead Economic Preview: Week of 13 April 2020. The coming week sees the release of some eagerly awaited official data which will indicate how some of the world's key economies have fared in the face of the COVID-19 outbreak during March. Early data such as initial jobless claims in the US and UK have looked like spreadsheet errors, spiking higher as the pandemic led to lockdowns and business closures. Similarly, the March PMI data showed global business contracting at the steepest rate since 2009 as efforts to contain the virus caused activity to collapse across huge swathes of the economy, often to unprecedented degrees in areas such as travel and tourism.

Local news

Reuters/ UK: 29% of British companies reduced staff levels over the short term as the coronavirus crisis hammered the country’s economy, a survey published by the Office for National Statistics on Thursday showed.

Reuters/ GERMANY: German Health Minister Jens Spahn told that the coronavirus infection numbers in Germany were showing a “positive trend” and if that continued, it would be possible to talk about a gradual return to normality after the Easter break. Citizens sticking to the restrictions on public life over the Easter holiday was a precondition for a possible easing of the lockdown.

Reuters/ GERMANY: According to the German Labour Office some 650,000 companies had applied for short-time work in Germany by April 6 and the number of people on the scheme due to coronavirus is likely to be much higher than during the global financial crisis. Short-time work is a form of state aid that allows employers to switch employees to shorter working hours during an economic downturn to keep them on the payroll. It has been widely used by industry, including Germany’s car sector.

Bloomberg Opinion/ Germany will be a post-coronavirus winner. Fiscally sound governments will be able to pump money into their companies unhindered by state aid rules. The EU needs an equity fund to level things up.

Reuters/ ITALY: Italian industrial output declined by 1.2% month-on-month in February, showed a smaller drop than expected after a jump the month before. Reuters survey of 18 analysts had pointed to a 1.7% fall following January’s 3.6% monthly increase, which was revised down marginally from an originally reported 3.7%.

TASS/ ITALY & RUSSIA: The consequences of the pandemic will definitely affect trade and economic relations, including those between Russia and Italy, Russia’s ambassador to Italy Sergey Razov said in an interview with TASS.

Reuters/ POLAND: Poland’s government may decide to extend restrictions to fight the spread of the coronavirus, but no drastic new moves to combat the pandemic are not Planned.

Reuters/ CHINA: China’s commerce ministry said on Thursday that the country’s imports and exports improved in March, without elaborating. But some foreign trade companies, especially textiles firms, have had existing orders delayed or cancelled and are having difficulties in receiving new orders, said ministry spokesman Gao Feng. China’s exports fell 17.2% in January-February from the same period a year earlier, customs data showed, marking the steepest fall since February 2019. Imports sank 4% from a year earlier.

Reuters/ JAPAN: Some companies in the Tokai central Japan region, which is home to auto giant Toyota Motor Corp and its parts suppliers, are cutting back on capital expenditure and holding off on new hiring.

Reuters/ JAPAN: Uncertainty over Japan’s economic outlook is “extremely high” as the coronavirus pandemic hits output and consumption, central bank Governor Haruhiko Kuroda said, stressing his readiness to take additional monetary steps to prevent a deep recession.

Sector news

Reuters/ Daily global sector & industries data (as of April 9th, 10:00 am).

OECD/ Business closures during the #COVID19 crisis could result in a 15% or more reduction in the level of output in advanced and major emerging-market economies

The Economist/ TMT: With millions stuck at home, the online wellness industry is booming.

Mobile Monkey/ TMT: Ten successful startups founded during 2008 Great Recession.

Reuters/TMT: France’s competition authority issued a ruling that Google would have to pay up to French publishing companies and news agencies for re-using their content. The ruling by the French ‘Autorite de la Concurrence’ body followed an earlier complaint by several unions representing French press publishers regarding Google’s practice.

Reuters, FT/ TMT: The U.S. Senate has told its members to not use Zoom’s video conferencing app due to data security concerns, the Financial Times reported on Thursday, even as the company attempts to stem a global backlash against its fast-growing app.

BCG/ ATOMOTIVE: Impact of COVID-19 on the Automotive Industry.

Refinitiv/ TOURISM: Countries whose tourism has suffered most from Covid-19 outbreak.

Reuters/ CONSUMER GOODS: Russian retailers have seen a sharp spike in alcohol sales in recent weeks, with consumers rushing to buy vodka, whisky and beer at a time when Moscow and other regions have imposed partial lockdowns to stem the spread of the coronavirus. In the last week of March, vodka sales across Russia’s largest retail chains jumped 31% in year-on-year terms, while whisky and beer purchases increased 47% and 25% respectively, Nielsen, a market research firm, found.

Bloomberg/ METAL: Aluminum prices are collapsing and excess inventories are rising fast, but the market isn’t yet facing the crisis that ravaged the industry in 2008. Of all base metals, aluminum looks set to be the worst affected by the coronavirus pandemic, as orders from car-makers grind to a halt and supply remains stuck at high levels.

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About Eight International

Eight International is a global advisory organization founded in 2016 by six consultancies sharing the same values. A globally integrated teamof over 70 leaders and over 600 professionals seamlessly advises corporate clients, businesses, private equity funds and leading investmentbanks to help navigate challenges across transactions, restructuring and operational transformation. Eight International brings innovativesolutions in a broad array of industries through its three key pillars: Reactivity via its nimble business model, Quality of its experiencedpractitioners and Independence, given no conflicts of interest.

UNITED KINGDOM | FRANCE | GERMANY | BELGIUM | NETHERLANDS | iTALY | SPAIN | POLAND | RUSSIA | INDIA

About Eight Advisory & Eight International

Eight Advisory provides guidance to managers, investors and banks in their corporate Transactions, Reorganizations and Transformations bothin France and internationally. The firm’s 440 employees, including 54 partners, propose a financial and operational specialization dedicatedto assisting managerial decision-making.

Eight International is a global advisory organization founded in 2016 by six consultancies sharing the same values. A globally integrated teamof over 70 leaders and over 600 professionals seamlessly advises corporate clients, businesses, private equity funds and leading investmentbanks to help navigate challenges across transactions, restructuring and operational transformation. Eight International brings innovativesolutions in a broad array of industries through its three key pillars: Reactivity via its nimble business model, Quality of its experiencedpractitioners and Independence, given no conflicts of interest.

After hours

Bloomberg Opinion/ How would you decide to restart the economy? The tentative optimism in parts of Europe and the U.S. about a turning point in the rate of coronavirus infection is encouraging more people to start thinking about how and when to restart economies. It is a crucial and complex issue involving an unusual range of risks, uncertainties, difficult judgments and trade-offs.

New Yorker Cartoons/ Cartoon by @drewdernavich.