The Chinese government ended the 76-day lockdown of Wuhan on April 8. Outside Wuhan, many local governments had already eased restrictions on movement and shifted their focus to reviving the economy. This letter documents several facts of the post-lockdown economic recovery in China. The main findings are summarized as follows.

(1) The official statistics suggest a quick recovery in manufacturing. The bouncing-back of manufacturing can also be seen in non-official data on city-to-city truck flows, active online job posts and air pollution emissions.

(2) Electricity consumption, retail sales and catering income suggest a much more persistent output decline in services. The business registration data also shows less firm entry in services.

(3) There is huge cross-region heterogeneity. Our data on visits to key locations and firm entry suggest a stronger recovery in the southeast region.

(4) Small businesses were hit much harder; their February sales shrank to about 35 per cent of their 2019 level, but have been slowly recovering in March 2020. April will be the key month to determine the recovery speed.

Read the letter here

This research studies the interaction between economic decisions and epidemics. The model implies that people’s decision to cut back on consumption and work reduces the severity of the epidemic, as measured by total deaths. These decisions exacerbate the size of the recession caused by the epidemic.

The competitive equilibrium is not socially optimal because infected people do not fully internalize the effect of their economic decisions on the spread of the virus. In our benchmark model, the best simple containment policy increases the severity of the recession but saves roughly half a million lives in the US.

Read the research here

The global economic shutdown triggered by COVID-19 has put the North American private debt industry to its first major test. Top of mind for industry professionals right now is how the US private debt market is likely to fare. Looking back, what lessons can be learned from the global financial crisis that are relevant today? What lessons are emerging as a result of COVID-19? And looking forward, how might the industry evolve?

To help answer these questions, Preqin compared GFC-era data and Q1 2020 data across key metrics such as fundraising, deals, and performance. They also spoke with industry experts who offer valuable insight into how the market has changed since the GFC – and what that might mean for the future.

Read the research here

The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. As a result of the pandemic, the global economy is projected to contract sharply by –3 per cent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario–which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound—the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalises, helped by policy support. The risks for even more severe outcomes, however, are substantial.

Effective policies are essential to forestall the possibility of worse outcomes, and the necessary measures to reduce contagion and protect lives are an important investment in long-term human and economic health. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. And internationally, strong multilateral cooperation is essential to overcome the effects of the pandemic, including to help financially constrained countries facing twin health and funding shocks, and for channeling aid to countries with weak health care systems.

World economic outlook

Congressional Research Service, which provides research to the US Members of Congress outlines the global economic effects of COVID-19.

Read the report here.

The PRI is working with signatories to further develop thinking on what the COVID-19 crisis means for investors. It is establishing two signatory participation groups to coordinate and develop investor responses, focusing on short term responses, and a future economic recovery phase.

The PRI lays out actions for investors.