First published on June 12th.
This note is the 7th weekly update of Carraighill’s COVID-19 recovery framework.
1. Track the virus (new cases levelling off):
- The share of world GDP past peak is now 74%, up marginally from 72% last week. Three US states and several large emerging markets are not yet at peak (India, Mexico, Brazil). It concerns us that there may always be a persistent share of world GDP which is always fighting new outbreaks. This would clearly place an anchor on world GDP growth prospects.
- Second waves of COVID are likely to be less severe than the first and are unlikely to precipitate severe lockdowns.
- The US appears to be experiencing a second wave (or a prolonged first wave) in southern states and California. New cases and hospitalisations are rising.
2. Monitor the lockdown intensity (easing continues):
- Lockdown stringency is now at a GDP weighted world average of 55 (out of 100). This is down from 64 one month ago.
- Countries representing 43% of world GDP have eased in the past 2 weeks. Italy, Mexico, Poland and Saudi Arabia have seen the biggest easing.
3. Measure the subsequent recovery (improving):
- Electricity usage is rising in European countries, driven by commercial usage as restrictions ease. Greece and Italy are down 14-15% YoY while France and Germany are down 6-7%, suggesting uneven economic recoveries.
- Public transport usage and restaurant bookings continue to rise gradually in major world cities.
New Zealand has seen a jump retail spending following the full lifting of restrictions. Credit and debit card purchases rose 79% in May, compared to April, but are 9% lower than February levels.