COVID-19 NEWS EXCERPTS:PLANNING FOR RECOVERY

APRIL 20 - 27

RIPLEY TOOLS I Covid-19 News Excerpts: Planning For Recovery

The impact of COVID-19 on our customers in the industry

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General

Saving our livelihoods from COVID-19: Toward an economic recovery

The COVID-19 pandemic is a global tragedy. But that shouldn’t—and needn’t—prevent us from finding innovative ways to accelerate progress. It would not be the first disaster to do so. This may be the right time to introduce fiscal, labor, pension, social, environmental, and economic reforms to speed up progress toward sustainable development.

Political leaders might condition access to massive economic stimulus programs on efforts to reduce informality, rethink healthcare systems, digitize entire sectors of the economy to accel-erate productivity, and encourage digital innovation—especially high-quality public education with universal internet access.

Once the pandemic ends, countries around the world will probably find themselves more in debt than ever. If they restructure and innovate, attract investment, and increase their productivity, a

new era of human development will begin.

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Economic recovery from coronavirus means resisting the urge to back away from globalisation

Covid-19 is a crisis of globali-sation, propagated by around 800,000 international flights carrying over 100 million people across borders every week, along with the cruise liners carrying half a million or so tourists in any week of the year.

The planes have now vanished from the skies and the cruise ships from the oceans, with their passengers disappearing like a swarm of bees back into their hive. International travel will be the last industry to re-emerge after the viral wave has subsided.

The crisis has also brought fresh questioning about the value of international trade and invest-ment. For decades consumers across the world have lapped

up the goods manufactured in China with unrivalled efficiency and at an unbeatable cost. Over a 20-year period, from the late 1980s to the global financial crisis in 2007–08, the blossoming of China along with many other emerging nations sent trade volumes soaring from 35% of global GDP to 60%.

It’s as if politicians have suddenly awakened from a long slumber to discover that supply lines—the arteries of globalisation—have transformed into chains of dependence. There’s a parliamen-tary inquiry underway considering whether Australia is too reliant on China and too dependent on foreign investment.

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Economic recovery after shutdown could take up to three years

According to the researchers, the recovery of the economy will begin as soon as the restrictions on economic activity ends, but the transition to the original growth path will take time.

“If they restructure and innovate, attract investment, and increase their productivity, a new era of human development will begin.”

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Firstly, employees who were previously laid off, will not be reinstated immediately. Secondly, post-crisis investment will be limited by the financial conditions of companies, and thirdly, the demand for consumption and intermediate goods is likely to remain below pre-crisis levels for some time.

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Unlocking the lockdown: Asia Pacific’s road to recovery

The Chinese economy should recover strongly in the second half provided COVID-19 infection curves flatten in the United States and western Europe by late Q2, as capacity utilization returns to normal and a bigger-than-expected stimulus lends a fillip to growth.

Bold responses in other Asian economies will also help produce a strong second half in the region. Asian governments have announced wide-ranging monetary and fiscal interventions to cushion the worst of the pandemic’s effects and prevent a downward spiral in economic conditions.

In light of these measures, we expect that a very weak first half of the year is likely to be followed by a strong second half, laying the foundations for a vigorous revival of economic dynamism in 2021.

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Forecasting the Global Business Impact and Recovery from Covid-19

By combining the forecasts of over 4,300 investment research

analysts on thousands of public companies around the world, Visible Alpha created a mosaic of market expectations for the global economy over the next two years, with four consistent and distinct trajectories emerging from our analysis.

While individual companies and even whole sub-industries will have very different experiences, our analysis suggests that expectations of recovery for economic sectors follow patterns that can be broken into four broad categories:

Mild Disruption Rapid Recovery

While the Consumer Services, Health Care and Technology industries are experiencing a disruption (extremely severe in some cases), the underlying demand and economics appear largely unchanged, with analysts expecting a return to relative normalcy within a year.

Sharp Shock Slow Improvement

Consumer Goods, Industrials and Materials sector companies have taken a massive shock, and most will take the better part of two years just to get back to 2019 levels. Nevertheless, analysts expect steady progress each quarter in that direction.

Double Whammy Long Road Back

Energy has taken the sharpest hit, with both demand and supply side shocks. While Financials haven’t been as dramatically impacted, analysts predict that both these sectors have reset to lower levels of profitability. A return to pre-pandemic economics appears to be a longer-term prospect for compa-nies in these industries.

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Business as Usual

The Utilities and Telecommu-nications industries are viewed as being largely immune to the impact of recent events, with revenue expectations almost indistinguishable from pre-pan-demic forecasts.

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EU Leaders Weigh Massive Virus Economic Recovery Measures

As businesses cautiously open their doors in some European countries and citizens begin to venture out, the 27 leaders will endorse a series of urgent spending measures and debate a massive recovery plan they hope to introduce in coming weeks.

Speaking to the German parlia-ment ahead of the meeting, Chancellor Angela Merkel said her government stands ready to help partners in trouble and is already contributing to a 540-billion-euro ($587 billion) rescue package expected to be endorsed later Thursday.

Drawing up a recovery plan that can be endorsed by all will be more

challenging. The consensus is that it should total at least 1-1.5 trillion euros and target the economic sectors and European regions hit hardest by the coronavirus.

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Not Back But Forward: What The Post-COVID-19 Economic Recovery Models Are Getting Wrong

As Governments around the world work their way through the COVID-19 crisis, new models have emerged showcasing different scenarios for ‘recovery’ and a ‘return to normal’ from policy influencers such as the World Bank, IMF, investment banks such as Morgan Stanley and Goldman Sachs, management consulting firms such as McKinsey, BCG, Deloitte, Nobel Prize Winning Economists, Market Analysts and Policymakers.

These models all get one thing wrong – they all use GDP as the yardstick to ‘return to normal.’ This is a dangerous assumption against which success should be measured. In a large survey conducted in the UK last week, only 9% wanted life to return

back to pre-crisis ‘normal.’ If surveys are conducted around the world, it is likely that similar levels of discontentment with the pre-COVID world would emerge.

Having been at the forefront of economic responses during the 2008 Banking Crisis and 2011 Eurozone crisis, it has been clear from that experience that most countries did not ‘build back better.’ In both crises, whilst a Great Depression was avoided, a decade later all other indicators such as inequality, environmental degradation, measures of citizen happiness, all continued on a structurally downward trajectory.

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Apple CEO Tim Cook reportedly told President Trump that he predicts a V-shaped economic recovery after the coronavirus

Apple CEO Tim Cook told Presi-dent Trump that he expects the economy to take a V-shaped recovery when it bounces back from the COVID-19 pandemic, according to CNBC.

“In a large survey conducted in the UK last week, only 9% wanted life to return back to pre-crisis ‘normal.’”

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A V-shaped curve is a more positive outlook on economy’s recovery, indicating that it would take a sharp upturn after bottoming out. St. Louis Federal Reserve President James Bullard also recently said he sees “no reason” why the economy won’t be able to recover in a V shape, according to Bloomberg.

That assessment comes after experts had cast doubt on a V-shaped recovery as the United States struggles to contain the virus and jobless claims reach all-time highs.

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Toward COVID-19 Recovery: 3 Economic Cases

To help frame planning discus-sions, which many leadership teams are having right now, Deloitte has crafted three economic cases—mild, harsh, and severe—that describe what could unfold over the next 18 to 24 months.

The Mild Economic Case

In this case, the pandemic eases sooner than experts currently anticipate. Effective public meas-ures coupled with faster COVID-19 testing combine to contain the virus; the crisis abates within a matter of months. The overall economic impact is sizable, and

small- and medium-sized busi-nesses, in particular, suffer, but something close to “normal life” returns, even if it’s not the same as before the pandemic hit. More business and social activities move online—and are staying there.

The Harsh Economic Case

In this case, the pandemic continues apace, with waves of infection lasting through the summer and perhaps into the fall. A prolonged recession with weak supply and demand combined with financial system shocks wreaks havoc on social and economic life, but not all countries suffer to the same degree. Those that faced the pandemic sooner and reacted more aggressively bounce back faster, while those slower or less consistent in their responses are hurt more deeply and for longer. Before long, virtual

life is real life in many places. Companies struggle to strike the right balance between acceler-ating their investments in robotics and other techniques to reduce their reliance on human labor, and capitalizing on policy incentives aimed at getting people back to work in 2021.

The Severe Economic Case

The pandemic is insidious. Countries that today seem to have things under control confront a return of the virus, while those still struggling find that the virus outruns every effort at contain-ment. The world is just too big to simultaneously contain the virus everywhere. The virus cycles (and mutates) between wealthier nations and the emerging econ-omies with which they trade. Even the most substantial fiscal and monetary interventions in history fall short. Societies begin

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and April may have crashed by between 20% and 30%.

Speaking after the video confer-ence, French President Emmanuel Macron said there was consensus among EU states on the need for a “strong, coordinated response [worth] around 5 to 10 [percentage] points of GDP.”

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A flood of corporate debt could make the economic recovery more difficult

Corporate debt was already at historic highs even before the coronavirus crisis. Now it’s soaring at an unprecedented pace as companies scramble to ensure they have enough cash to weather the crisis. That added debt could make an economic recovery much more difficult.

Companies will have to pay down those borrowings, forcing them to scale back planned investments, defer capital spending projects or postpone bringing back employees they let go during the crisis.

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China shows challenges of post-lockdown economic recovery

“China is exposed to U.S. and EU markets, but to me domestic demand matters a lot more,” Andrew Polk, a partner at Beijing consultancy Trivium China, said in an interview. “China is a domesti-cally driven economy.”

“The supply chain is very complex, you have parts moving around from different parts of China and different parts of Asia. It’s a big-ticket item that is normally pretty commensurate with economic performance,” he said.

He agrees with the IMF that China will most likely achieve 1% growth this year, but the situation remains fragile.

“If anything goes wrong at all we’re in negative territory, and the next two to two and a half months are critical for determining that path,” he said.

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Sources: Trump set to slash regulations in coronavirus economic recovery plan

The Trump administration plans to launch a repeal or suspension of federal regulations affecting businesses, with the expected executive action seen by advisers

to shut down as health care systems overload. Technology adoption increases, but so does distress and suspicion. Individual privacy—about matters of health, whereabouts, and interactions with others—is deemed a luxury people can no longer afford.

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Europe is preparing a trillion-euro fund to rebuild its economy

EU leaders have agreed to create a fund that could raise at least 1 trillion euros ($1.1 trillion) to rebuild regional economies ravaged by the coronavirus pandemic.

“This fund shall be of a sufficient magnitude, targeted towards the sectors and geographical parts of Europe most affected, and be dedicated to dealing with this unprecedented crisis,” leaders of the 27 EU countries said in a statement after they met via video conference on Thursday.

The International Monetary Fund expects EU GDP to fall by 7% this year, and recent data suggests economic activity in March

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as a way to boost an economy facing its worst shock in gener-ations, two people familiar with the planning said.

The White House-driven initi-ative is expected to center on suspending regulations for small businesses and expanding an existing administration program that requires agencies to revoke two regulations for every new one they issue, the two people said.

While the plan remains in flux, changes could affect envi-ronmental policy, labor policy, workplace safety, health care and other areas.

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Telecom

New Bill Pumps $750M Into U.S. Telecom

Having concluded Chinese tele-coms ZTE and Huawei should be scrubbed from U.S. 5G networks, a bipartisan group of House members is looking to promote U.S. alternatives with a cash infusion.

The bill would authorize up to $750 million for a Department of Commerce-administered program—in consultation with the FCC and other agencies—to speed deployment and use of open interfaced, stand-ards-based, interoperable 5G networks employing trusted suppliers.

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Facebook Buys $5.7 Billion Stake in India’s Biggest Telecom Operator

Facebook is investing $5.7 billion in Jio Platforms, the digital services arm of India’s largest private sector company, Reliance Industries. “India is a special country for us. Over the years, Facebook has invested in India to connect people and help businesses launch and grow said Facebook on its blog.

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Power

Green energy could drive Covid-19 recovery with $100tn boost

Renewable energy could power an economic recovery from COVID-19 by spurring global GDP gains of almost $100tn (£80tn) between now and 2050, according to a report.

The International Renewable Energy Agency found that accelerating investment in renewable energy could generate huge economic benefits while helping to tackle the global climate emergency. Investing in renewable energy would deliver global GDP gains of $98tn above a business-as-usual scenario by

2050 by returning between $3 and $8 on every dollar invested.

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The next stimulus bill will help save our economy — it should transform it, too

No ordinary spark will restart the economy. We need a lightning bolt. Our stimulus must focus on shovel-ready projects in job intensive industries that can create jobs quickly for people out of work, bend the carbon curve, and cut air pollution that threatens the public health of frontline communities.

There are many infrastructure needs: ports, water utilities, the electric grid, mass transit, homes, buildings, and manufacturing.

“No ordinary spark will restart the economy.”

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The good news is there is no shortage of ideas that members of Congress have put forward to invest in our infrastructure while reducing pollution and creating green jobs.

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Guess what? Building a better world will also speed economic recovery

Many governments are considering how to rebuild their economies once the pandemic is brought under control, and there’s no shortage of voices calling for revival packages to be in line with pre-pan-demic commitments to solve the climate and extinction crises.

Normally it takes around 25 years to transform any industrial sector and all its associated value chains. But we’ve now seen how fast things can move when they have to; here’s how our big chance can speed up action on the other crises.

The International Energy Agency (IEA) is saying that the top three categories of investments for governments to consider in their economic stimulus packages are energy and resource efficiency, upgrading technology, and infra-structure.

In the United States and Europe alone, more than 3.3 million people worked in the energy efficiency industry before the pandemic, with the majority employed by small and medium-sized businesses. Around 60 per cent of expenditure on home energy efficiency retrofits is to pay workers so the benefits in terms of job creation compared to other types of stimulus programs are greater.

The replacement of inefficient technologies with more modern and efficient ones has similar benefits. Governments can introduce replacement schemes – sometimes called “cash for clun-kers” – which come with incentives, directly to consumers or through manufacturers and retailers.

The evidence for success comes from the United States Obama administration. The 2009 economic stimulus scheme gave rebates to 680,000 consumers to replace old vehicles with new ones with the largest rebates going for more efficient vehicles to increase the proportion of energy efficient sales. It resulted in 380,000 vehicle sales brought forward from the future.

Large-scale infrastructure projects can create many more jobs per dollar spent and also use local value chains. Examples of projects which support energy efficiency include smart grids, electric-vehicle charging, next-generation digital connectivity, public transport infrastructure, cycle lanes and pedestrian zones, and LED street-lighting upgrades.

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How clean energy transitions can help kick-start economies

Around the world, leaders are getting ready now, drawing up massive economic stimulus packages. Some of these plans will provide short-term boosts, others will shape infrastructure for decades to come. We believe that by making clean energy an integral part of their plans, governments can deliver jobs and economic growth while

also ensuring that their energy systems are modernised, more resilient and less polluting.

Experience has proven the effec-tiveness of including energy effi-ciency in stimulus programmes. It improves competitiveness, lowers energy bills and creates jobs quickly.

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