The knives are out for economic forecasts around the world as fears grow over what many believe is a looming global pandemic.
For the first time the number of new coronavirus cases outside China where the outbreak began have exceeded those within and everywhere there are signs that leaders are worried.
While U.S. President Donald Trump said America was “totally prepared” in a special address about the virus threat last night, he appointed vice president, Mike Pence, in charge of the U.S. response. Japan has ordered all schools to shut down starting Monday through spring break in early April. Germany’s health minister warned that the eurozone’s biggest economy is “at the beginning of an epidemic.” And Finance Minister Olaf Scholz put aside the country’s “black zero” budget policy and announced limited fiscal stimulus.
“There is every indication that the world will soon enter a pandemic phase of the coronavirus,” Australia Prime Minister Scott Morrison told a news conference as he launched an emergency response plan. French President Emmanuel Macron called the outbreak a “crisis, an epidemic that is on the way.”
We have already seen the carnage this has caused on markets with global stocks shedding $3 trillion this week alone. Watch for more risk aversion today with Dow futures already down 377 points before the bell.
Though the impact of the virus is considered a short-term risk, economies will take a hit.
BofA Global Research says Canada’s economy is especially exposed to that risk because of its openness and reliance on oil. Lower oil prices, lower outside demand for goods and services and disruption in production chains will all take a toll. Add in the disruptions caused by this month’s rail blockades and BofA is cutting Canada’s GDP forecast for 2020 to 1% from 1.5%.
BofA also now expects the Bank of Canada to cut its rate by 25bps in April; previously it had forecast a hold.
Oxford Economics also sees the “stall speed” of the Canadian economy being tested by the virus and rail blockades. It put the odds of a recession this year at a “worrisome 40%.”
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- Notable earnings: Toronto-Dominion Bank, National Bank, Maple Leaf Foods, Pembina Pipeline, Husky Energy, Whitecap Resources, , Ritchie Bros Auctioneers, Transcontinental, Stars Group, Beyond Meat, Dell, Best Buy
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Concerns about a global pandemic are mounting after the number of new infections of coronavirus outside of China outstripped those within for the first time on Wednesday. Germany warned that it was heading for an epidemic, Asia reported hundreds of new cases and Brazil confirmed Latin America’s first infection. In the growing anxiety, markets have lost trillions of dollars, airlines have cut flights, hotels have been locked down and businesses closed. There is even concern about the 2020 Tokyo Olympics. Japan has about 170 cases, besides the 691 linked to a cruise ship quarantined off its coast, and Prime Minister Shinzo Abe called for public events to be scrapped to stem the virus.
With files from The Canadian Press, Thomson Reuters and Bloomberg
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