Facing a “uncertainty extraordinary “the Organization of economic cooperation and development (OECD) has constructed two scenarios : one where the pandemic Covid-19 “remains under control “ and the other where it starts with a second wave. In the first case, the gross domestic product (GDP) worldwide will decline in 2020 from 6 %, in the second 7.6 %. In 2021, it will bounce according to the case of 5.2 %, or only 2.8 % if the coronavirus begins to circulate, with what that implies of containment and / or quarantine.
At the beginning of march, so that the coronavirus was already hit hard in China but not yet the other major economies of the world, the OECD forecast a simple settlement at 2.4 % global growth for the current year. But in three months everything has changed.
“The containment has reinforced inequalities between workers “
That whether or not there is a second epidemic wave, “at the end of 2021, the loss of income will exceed that of all previous recessions over the last hundred years except in times of war, with terrible consequences and long-lasting for people, enterprises and governments “says the chief economist of the OECD, Laurence Boone. “Everywhere, the containment has reinforced inequalities between workers “ qualified to telecommute and less qualified “often on the front line “ in the fight against the pandemic, she said.
The Covid-19 also “accelerated the switch from a ‘great intégration’to a ‘great fragmentation'” of the world economy with the appearance “any further restrictions to trade and investment “, note yet Laurence Boone.
France is among the countries most affected
The euro area will be particularly affected with a decline in the gross domestic product (GDP) is expected to be 9.1 % in the best-case scenario, and 11.5 % in the case of the second wave in 2020. France is a part, with Italy and Spain, the countries hardest hit : GDP is expected to decline in france, 11.4 % in 2020, and even 14.1 % in the case of the second wave. 2021 should, however, bring a strong rebound of 7.7 % if the epidemic there, and all the same, from 5.2% in the case of a return of the virus.
For the United States, the OECD expects a decline in GDP of 7.3%, or 8.5 %, depending on the scenario. China, world’s second largest economy behind the United States and still champion of the growth last year, with 6.1 %, will see it also its economy will contract 2.6 %, or of 3.7% this year if the y virus has resurfaced on a massive scale. In the third place, Japan will be hit by a recession of 6 % in the favourable scenario, and 7.3% if the epidemic starts again.
“Make supply chains more resilient “
To enable economies to recover, the OECD suggests, for instance, of “strengthening health systems “of “to facilitate the evolutions of the business while strengthening the protection of the revenue “and “make supply chains more resilient “. “The government must seize this opportunity to design an economy that is more just and more sustainable, make the competition and the regulations smarter, modernize the taxation, spending and social protection “, suggests Laurence Boone.
It points to the essential role of trust, without which neither the consumption nor the investment will not restart. Gold “trade barriers and threats to supply chains also reduce the decrease of the uncertainty, necessary for the investment to resume “, leading economist at the time where the hopes of pre-crisis regulation of the trade conflict, the sino-american evaporate.
Finally, “the international community should ensure that when a vaccine or treatment will be available it could be distributed quickly throughout the world “, demand Laurence Boone. “Otherwise, the threat will persist. “
The funds are not approved in the EU, but this does not prevent export to all over the world. The corporations say that if used correctly, nothing can go wrong.
The cloud came at noon. To this day, no one knows exactly what was in it. When the plane sprayed its cargo over the fields in May last year, 15 children were having lunch at the neighboring village school of Guyraroká in the Brazilian state of Mato Grosso. Subsequently, several villagers, mainly children, came to the hospital with signs of poisoning. Dogs and chickens died.
So it is in a report that environmental groups from Brazil and South Africa want to bring out this Thursday, together with the church aid organization Misereor, the Rosa Luxemburg Foundation and the development network Inkota. It is less about the fateful consequences of pesticides per se – rather it is about the involvement of German companies in the global business with agricultural toxins. The accusation: Bayer and BASF, two of the largest agrochemical groups in the world, sell active ingredients in countries in the south that have long had no future in Europe – because their approval was never granted, never applied for or even revoked by EU authorities. Behind it is a global business with “double standards”, according to the study, at the expense of the population: “While profits flow to the USA, Europe or China, local people are permanently confronted with health and environmental damage.”
The allegations weigh heavily. For example, the Bayer Group, which has been the undisputed number one on the world market since the takeover of Monsanto, is to sell the active ingredients carbofuran, propineb and thiodicarb in South Africa. Their EU approval has been revoked. In Brazil, Bayer also sells substances such as fenamidon, which is said to pose a risk to aquatic organisms – the EU also revoked its approval in 2018. The approval for the controversial fungicide carbendazim already expired in Europe in 2016. According to the study, it is still available in Brazil, as is the growth regulator cyclanilide or the herbicides ethoxysulfuron and ioxynil. Accordingly, BASF sells the herbicide cyanamide to Brazil, which also failed due to EU inspectors, as well as the insecticide flufenoxuron. The list of active ingredients fills two pages in the report.
In the area around Guyraroká, residues of such active substances can also be found in groundwater. According to investigations by the Sisagua water authority, residues of 27 different pesticides were found in the nearby town of Caarapó – including the active ingredient carbendazim, as Bayer has been producing it to date.
Bayer voluntarily withdraws the active ingredient carbendazim
Bayer and BASF reject the allegations. “Farmers are reliant on modern crop protection products to protect their crops against weeds, pests and plant diseases,” emphasizes a Bayer spokesman. Bayer has also stopped selling crop protection products in 2012 that the World Health Organization considers to be particularly toxic. “Where the situation changes, we voluntarily withdraw products from the market, as we currently do with the active ingredient carbendazim, for example.” Since 2016, active substances in crop protection products must also be registered in at least one country in the OECD industrial group. Both groups point out that their products have been extensively tested and checked by regulatory authorities, and there are also training programs for small farmers. A spokeswoman for BASF adds: The products are safe “if they are used correctly according to the instructions on the label and the guidelines for product responsibility” – even when spraying by plane.
But experts have doubts as to whether the substances from European laboratories are really used with care. “Companies like to argue that nothing can happen if the pesticides are used safely,” says Sarah Schneider, agricultural expert at Misereor. “Only one can often not assume that it will be used safely.” In any case, the handling of pesticides is far more lax in many places than in Europe.
There are various international agreements and regulations for the global trade and use of pesticides in agriculture, but there are gaps. Nevertheless, they are important because not all countries have the means and capacities for comprehensive testing procedures. In addition to the national requirements, two voluntary framework agreements and four binding international conventions regulate the handling of pesticides. Of particular importance here are the Stockholm Convention, which sets out international prohibitions and restrictions on certain long-lived organic pollutants, and the Rotterdam Convention on International Trade in Hazardous Chemicals. Both have been ratified by well over 100 countries.
But nowhere have the rules been relaxed as recently as in Brazil. The country has become the “world champion in pesticide use” since the approval of genetically modified plants, says Professor Antônio Andrioli, formerly a consultant to the Brazilian government and former vice president of the UFFS University in the south of the country. In the past five years alone, the stake has increased by 25 percent. “Since Jair Bolsonaro took office, new registrations of pesticides have increased significantly,” he adds. In 2019, more than 50 pesticides were approved, at least 23 of which were banned in Europe. However, this protects the Europeans only to a limited extent: some of the dangerous substances end up in the EU, for example in the form of residues in soybeans in animal feed. Brussels must put a stop to this with stricter import rules, Andrioli demands.
The federal government could also intervene. After all, according to German plant protection law, the Ministry of Agriculture can ban the export of pesticides to countries outside the EU if this is “necessary to avert significant risks to human or animal health or other dangers that cannot be remedied in any other way”. But the ministry only refers to international agreements. For the rest, one does not want to intervene “in the sovereignty of the third countries”, explains a spokeswoman. In the end, the countries themselves decided on the approval.
“It is difficult to understand that active ingredients that are not approved in the EU for good reasons are exported to the global south,” says Misereor expert Schneider. Critical shareholders have repeatedly denounced this. Next week they will have the opportunity again: Bayer has general meeting.
The finance minister would soon like to agree on a global tax reform with other countries.
Berlin Federal Minister of Finance Olaf Scholz does not want the planned global tax reform to be dragged off despite the corona virus crisis. Every company has to pay its fair share. “That is why it remains important, even in this time of crisis, to put an end to profit transfers and tax avoidance,” said Scholz on Thursday.
There should be no downward competition. It must be ensured worldwide that there is a minimum tax and that the tax system also fits the increasingly important digital industry. “We’re not quite there yet.”
The industrialized countries organization OECD wants to develop a new tax system with the support of 137 countries. Concrete suggestions should actually be made this year. At the G20 meeting in Saudi Arabia in February, Scholz was cautiously confident that there will still be a solution in 2020. “We have to be successful,” he said now.
An agreement would bring more budgetary resources, would be fairer and could prevent double taxation and solve trade disputes. A Treasury spokesman said plans were high on the agenda. The effects of the coronavirus pandemic on the schedules are currently being examined. Actually, an OECD conference with more than 130 countries is supposed to take place in Berlin in early July.
Experts are much more pessimistic than Scholz behind the scenes. “There is a danger that plans for a major tax reform will now be put on the back burner,” said an insider from the Reuters news agency. “In such a global economic crisis, everything has to be sorted out first. Nobody knows what the world looks like afterwards. So you can’t just decide new tax rules. “
If it succeeds, it could be the largest international tax reform in around 100 years. In particular, tax avoidance for globally active Internet groups such as Apple, Facebook, Google and Amazon be prevented. Clarifying technical details is difficult.
More: With the global minimum tax, there is a risk of patchwork on your own.
Madrid Alvaro Mallol had prepared. Since the coronavirus paralyzed China’s economy in January, the entrepreneur has filled his warehouse with intermediate products. “We worked overtime in logistics and production in order to be able to send as many deliveries as possible before the crisis came to Spain,” says the head of Dicomat, a manufacturer of electrical components that are used in Industry 4.0 or intelligent buildings come. The customers are mainly located in Spain, some in Portugal.
Mallol’s orders began to break in in the second week of March. The more the plague spread in his country, the fewer it became. Almost all Spanish companies, including Dicomat, have been closed for a week. “Incoming orders have only fallen by 70 percent and since Monday by 95 percent,” says Mallol.
With 70 employees, a turnover of more than ten million euros and hardly any debts with the bank, his company is one of those that are slipping into the crisis from a comparatively stable position. But its costs also continue to run, while the revenue collapses. He and his employees initially agreed on working time accounts. “But if we are not allowed to open again at the end of April, I have to apply for short-time work and probably also a loan,” he says.
Spain is one of the countries most affected by the pandemic worldwide. On Sunday there were officially 130,759 infected people, more than in any other country in Europe. Worldwide, there are only more cases in the United States.
The government could have limited the extent of the crisis if it had reacted earlier. The story of Covid-19 in Spain, it’s the story of an underestimated danger.
Hospitals before collapse
12,418 people died of the corona virus in Spain, almost a fifth of all deaths worldwide. The real extent of the infection is likely to be many times higher – there are by far not enough tests to examine all people with symptoms. The health system, which actually has a good reputation, is on the verge of collapse due to the outbreak.
That is why the government has decided to shutdown the economy. People should stay at home if possible. This shutdown is scheduled to end after Easter, while Prime Minister Pedro Sánchez extended the curfew on Saturday until April 26. In addition, he has already announced that further extensions will follow.
The country is heading for the worst recession since democracy was introduced in 1977. The first economic data are devastating: The confidence of entrepreneurs in the future, part of the purchasing manager index, fell in March to the lowest value ever measured.
Almost a million jobs have already been destroyed. The number of registered unemployed rose by 302,265 people in March as never before. Even before the crisis, unemployment in Spain was 14 percent. Only Greece is worse off in the EU.
The Spanish government, like so many others around the world, has launched an aid program consisting primarily of loan guarantees. The goal is to provide companies with liquidity so that they can bridge the gap without revenue. Once the virus has been pushed back, it is hoped that the recovery will be as steep as the downturn. However, many entrepreneurs are skeptical.
The government’s crisis management also creates uncertainty for them. The boss of the employers’ association CEOE, Antonio Garamendi, criticized the fact that Sánchez decided to shutdown without even contacting the social partners.
Resentment has also triggered a decree by left-wing populist labor minister Yolanda Díaz, which provides for a six-month ban on companies that take short-time work due to force majeure.
This goes too far for entrepreneurs. “How am I supposed to pay all employees if I only make 30 or 40 percent of my normal turnover after the crisis?” Asks Oscar Rivera, who has six restaurants in Madrid. He applied for short-time work for his 120 employees and took out a first loan to pay his current bills. He has already given up hope that he can still make a small profit this year. “For me, the only thing now is that we survive,” he says.
Experts expect a particularly significant slump, especially in the hospitality and tourism sectors, which are key sectors for the Spanish economy. Because only when everyone feels safe again will they travel or go to a busy restaurant.
“Many small and medium-sized companies will not be able to afford to keep all employees on when the alarm goes off,” says labor market expert Marcel Jansen from the Autonomous University in Madrid. “If the government sticks to this rule, many will rather file for bankruptcy.”
The entrepreneurs watch with suspicion how members of the left-wing populist party Unidas Podemos exercise their influence in the young coalition with the socialists. Spanish entrepreneurs have no idea of the socialist minister for economy, Nadia Calviño. The long-time EU budget director has long spoken out against a ban and also against a complete shutdown so as not to stall the economy. “But Podemos would love to reintroduce communism in Spain,” says a manager. Several employers are similar.
Government weighs down
The hands of the socialists are largely tied. The treasury is empty, the debts are just as high as the economic output. Spain cannot afford the generous aid packages that Germany has agreed with employers. After all, the EU is now showing a willingness to provide solidary fiscal support, even if not for the euro bonds such as Spain and Italy are demanding.
Spanish employer president Antonio Garamendi also points out that companies are going into this crisis more solidly than the previous one. “The Spanish companies are much stronger and more international today. That is a very important difference, ”he told the Handelsblatt.
The Pedro Sánchez government could at least have dampened the impact of the crisis if it had reacted earlier. While Mallol was filling his camp for fear of the virus in January, she apparently saw no reason to stock up on medical supplies.
When the GSMA mobile phone association canceled the Mobile World mobile phone fair in Barcelona in February out of corporate fear of contagion, Spanish ministers even reacted with a sniff and said there was no cause for concern. On March 8, when there were already 7,000 infected people in Italy and urgent warnings from the World Health Agency, the government allowed mass demonstrations to be held on World Women’s Day. Two ministers and Sánchez’s wife were then tested positive for the virus.
On March 5, emergency coordinator Fernando Simón said it made no sense to test people without symptoms. He is now infected too, and Spain is desperately trying to buy the necessary tests on the market to get a realistic picture of the spread. The Spanish government was not alone in its misjudgment. But for the Spaniards, that is little consolation.
The capital city of Madrid is the epicenter of the outbreak. It is famous for its noisy and busy streets full of honking taxis, street cafes and tapas bars. Now they look like an empty film set after the shoot. Instead, the camera in the evening news zooms into the crowded hospitals, where some patients are lying on the floor in the hallway and nurses are tying garbage bags because there is not enough protective clothing. It zooms in shopping malls that are turned into mortuaries because the crematoriums are overloaded. And she zooms in on the Madrid exhibition center, which has been converted into a huge hospital.
They are images that will burn into the minds of the nations. For now, they are making sure that the Spaniards endure the toughest curfew in Europe without any major complaints. You can only go out of the house one by one. And only to go shopping. Walks, jogging or out in the fresh air with a child – all of this has been prohibited for three weeks.
Doctors and nurses are now the new heroes. Every evening at 8 p.m., the Spaniards open balconies and windows and give them applause for minutes. The song that has developed into the hymn of the crisis often sounds from some hi-fi system: the hit “Resistiré” (“I hold out”) by the Spanish band Dúo Dinámico. “I hold on to live on,” says the chorus. “I will endure all the beatings and never surrender, even if my dreams shatter. Resistiré. ”
“Conditions like in war”
Carlos Álvarez is one of the heroes, even if he doesn’t like the name. The 32-year-old is a cardiologist in “La Paz”, one of the largest hospitals in the capital. He became a father shortly before the virus broke out and only started working again a few days ago. “Everything has changed completely,” he says. “Conditions in the hospital are now like in war.”
He recognizes colleagues in protective suits and with masks in front of his face by the eyes or not at all. 95 percent of all beds are reserved for corona patients. In the intensive care unit, which has 45 places, there are 133 patients. The clinic has mobilized beds for them with respirators from recovery rooms, surgery or anesthesia. In contrast, there are hardly any patients in cardiology. This is also a mystery of the crisis: “People with heart attacks hardly report,” says Álvarez. Nobody knows why – possibly for fear of getting infected in the hospital.
His colleague Almudena Castro, also a cardiologist, works in the middle of the Corona madness. “The worst thing for me is the loneliness of the patients,” she says. “They die alone without being able to say goodbye to their families.” Because of the risk of infection, she can only inform relatives on the phone. “Many of them lost father and mother within a few days,” she says. “This disease is incredibly cruel.”
Seven of the 20 colleagues from the cardiology department at La Paz Hospital got infected, some are in critical condition in their hospital. They are no exception: over 18,000 doctors and nurses have contracted the disease. The big problem is the lack of protective equipment.
The government later tried to buy the necessary material, but there was none left on the market. A large supply of tests from China was faulty, the producer did not have a Chinese license. Now a million quick tests have come. However, they only reliably detect infections that have existed for seven days. They are to be used primarily in hospitals and old people’s homes.
“The wounds remain”
According to the OECD, Spain is one of the countries where the least people die from preventable and treatable diseases. Health care expenditure is 15 percent below the European average, but the system is considered very efficient. The occupancy rate of hospital beds at 75 percent is lower than in Germany at 79 percent. “The Spanish system is well equipped for normal times,” says Jaume Ribera, health expert at the Spanish business school IESE. However, it is not enough for an extreme situation like the corona crisis.
In order to prevent a collapse of the health system, the economy is now also standing still, because the top priority is to contain the infections. Spain will feel the consequences for a long time. For company boss Mallol, the problem is not solved on the day that he is allowed to work again. “It takes six months in industry for us to reach our full capacities again,” he says. “This is the time it takes a project from development to production to sales. During this time we have no further income. ”
After all, the wave of infections is slowly leveling off. “But the wounds she has left will always remain,” says doctor Almudena Castro.
More: Europe is facing a historical test in the corona crisis.
The OECD warns that the impact of the coronavirus in the world isovercoming their worst economic forecastsand stresses that a coordinated effort by governments and central banks to overcome the crisis is urgent.
Earlier this month, at the launch of its interim forecasts, it had advanced that, according to its most adverse hypothesis, the coronavirus couldhalve the growth of the world economyin 2020 and place it at 1.5%, causing a recession in economies such as Europe or Japan.
“Now it seems thatwe have already advanced much furtherof the most severe scenario foreseen then, “said the secretary general of the Organization for Economic Cooperation and Development (OECD),Angel Gurra, in a new digital platform launched last night by your organization to group data and response policies.
In his opinion, it is required“a level of ambition similar to that ofMarshall plan, created by the OECD, and a vision similar to that of the New Deal, but now worldwide. “
Gurra stressed that this pandemic constitutes the third great economic, financial and social “shock” of the 21st century, after the attacks of September 11, 2001 and the global financial crisis of 2008.
Among its effects, the suspension of production in the affected countries, with collateral damage in the global supply chains, and a strong fall in consumption that joins the collapse in confidence.
The representative of the so-called “club of the rich countries” warned that although the strict measures that are being applied are essential to contain the virus, they push economies to “an unprecedented state of deep freezing, from which recovery will not be direct nor automatic “
The World Health Organization (WHO) announced this Friday that there are more than210,000 cases of COVID-19worldwide, while deaths have crossed the 9,000 barrier, according to the Efe agency.
Gurra stressed that in addition to acting to minimize the loss of life, a coordinated effort against the “great economic crisis” unleashed is also a priority, which will continue even when the worst health problem has passed.
The OECD Secretary General held recent statements such as the G7, which on Monday pledged to“do whatever it takes”through “close cooperation” to curb the economic and health crisis, but pointed out that it is insufficient.
Gurra urged support for healthcare staff and for healthcare regulatory agencies to work together to remove the bureaucratic hurdles holding back the development and delivery of vaccines and treatments, even for uninsured patients.
The OECD representative also asked governmentsreduce the requirements to access unemployment compensation, and warned central banks that a joint approach to monitoring and diagnosing rising tensions is better than “loose and inconsistent responses.”
“Everything in its time”: this is Sweden’s response in the fight against the coronavirus. Gatherings of more than 500 people are now banned, universities and high schools closed and telecommuting encouraged, but the time has not yet come to close. A unique strategy, orchestrated by a former anonymous whose lips the country is now suspended: Anders Tegnell, chief epidemiologist at the Swedish Public Health Agency.
The omnipresence of this expert, whose recommendations are followed to the letter by the government, symbolizes a first specificity of the Swedish system. “Traditionally in Sweden, politicians rely more on scientific expertise than on a form of political rhetoric of warfare, partly because we have not had a war for 200 years”, says Johan von Schreeb, head of the Center for Health Research in Disasters at the Karolinska Institute. While Denmark, for example, has closed
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Dhe spread of the corona virus has caused stock prices to collapse even further. There is currently no expert who wants to make reliable predictions about the future effects of the coronavirus. Estimates such as those of the Organization for Economic Cooperation and Development (OECD), if the outbreak is longer and spreads across the Asia-Pacific region, Europe and North America, and there is a global recession, are terrifying for investors. The sales button is pressed very quickly. The past trading days showed it.
The crash on Monday was followed by another even larger price slide on Thursday, which caused the prices on Wall Street to collapse as sharply as since the historic crash in 1987. The longest bull market in the history of the American stock exchange is now over. It lasted almost eleven years, from March 9, 2009 to February 19, 2020. Since then, the S&P 500 index has lost more than 25 percent, which, according to the official definition, has started a bear market. During the bull market, investors earned 529 percent based on the index rise and dividends.
It is pure fear that is influencing the stock market. Comparatively crisis-proof quality stocks were also sold mercilessly recently. The market experts continue to urge calm. For private investors who have lost a lot of money in the past six trading days, this is advice that should be difficult given a look into their own portfolio.
Parallel to the 2008 financial crisis
Christopher Smart, chief strategist at Barings, comments the price slumps on the stock exchanges very drastically: “What should have scared the markets the most this week is the dawning realization that nobody takes responsibility and there is no plan. Smart has complained that there has been very little coordination on how best to contain Covid-19.
The current risk situation is similar to that at the beginning of the 2008 financial crisis. Not because of falling prices or increasing volatility, but because of the information uncertainty, says Ivan Mlinaric from Quant Capital. “Neither the triggers nor the necessary countermeasures were clearly defined at the time – and they are not today either.” He continues: “Similar to 2007/2008, we are currently surrounded by a variety of trouble spots and causes,” says Mlinaric. “We see supply crises, demand crises, debt crises, even liquidity crises like in the American repo markets or in venture capital.” Not to forget the crisis in the oil market.
Are coordinated liquidity injections coming?
Many investors are no longer used to what is happening at the moment. A whole generation of market participants only got to know markets with clear trends and short, V-shaped corrections, Mlinaric continues. His advice to investors sounds understandable: “As investors, we should remember our old experience: If the markets are expensive and the economy is weakening, it is time to reduce portfolio risks and hedge economic risks.”
For many, however, that seems too poor. The call for the central banks, for coordinated liquidity injections, has become very large in recent days. However, many experts also admit that Fed & Co can only help to a limited extent in the current situation. The Fed’s first emergency rate cut in the past ten years and Fed CEO Jerome Powell’s reassuring words have not really calmed the financial markets.
ECB investors disappointed
“Although rate cuts do little to mitigate the direct effects of the virus on the supply side, coordinated liquidity injections could help the economy send a clear message to the market and stabilize the situation,” said Jeff Schulze, Legg’s investment strategist. Mason subsidiary ClearBridge Investments.
Olivier de Berranger, Chief Investment Officer at LFDE – La Financière de l’Échiquier, relativizes the impact of the central banks, but comments: “The central banks will not cure us, but they will help companies, consumers and states to weather the crisis better.
At first glance, the measures only seem to be used by large companies or speculators, continues de Berranger. “In fact, lower interest rates enable states to get into debt at lower costs and in this way launch budgetary or fiscal stimulus programs.”
Mysophobia on the stock exchange? In a way yes. Doctors use the technical term to describe the fear of illness due to contact with bacteria and viruses. Those affected often suffer from compulsory washing. That may not be a disadvantage in the current corona location. But financial experts are more concerned with classic fear in the sense of a perceived threat of share price losses.
The best indicator of this fear is the volatility index, which is often shortened to “Vix” in the industry. It extracts the expected fluctuations in investors’ value from the option prices for the S&P 500 on the leading financial market, Wall Street. The Vix remained at a historical low for a long time.
So the investors were fearless. But within a few days the fear barometer had more than doubled because of the corona worries. The global 13 percent drop in stocks in the past trading week tipped a previously relaxed mood into the opposite.
Fighting the epidemic could do more harm than the virus itself. And it doesn’t seem to be stopping spreading across the globe. Restrictions on trade due to the containment measures, however, slow down the economy. The OECD, as an organization of developed countries, sees the virus as the greatest threat to the global economy since the financial crisis. There is a real danger that investors will only see black. You may even get scared of your own fear, known as phobophobia among medical professionals. In this case, real panic sales would also be conceivable.
Investors may still need some time to look ahead in the typical way – after the virus wave. However, this should not take long. For mobile investors, it is important to buy shares in good time before the improving reports about the spread of the disease.
The potential enemy is in your own body. And this opponent is not going viral. He paralyzes his own thinking and doing: It takes the cool courage to buy orders when the news situation still seems cloudy. The doctor knows such fears of decisions from his practice. He calls it cairophobia.
More: Who will help the financial markets in the corona crisis? There is an answer to the question.
Erfurt Unlike the financial markets, the real estate market is lagging behind economic developments. From this point of view, owners can still be relatively reassured: if the spread of the coronavirus and the diseases can be managed, they hardly have to fear for their values.
Nevertheless, the real estate climate in Germany is deteriorating, as the index regularly surveyed by the real estate bank Deutsche Hypo shows. On the one hand, you have to know that this sentiment value has fluctuated in the past few months and that the trend is pointing downwards.
On the other hand, the current decline is primarily associated with a slump in mood values in the hotel sector. “The mood in the hotel property market is likely to have deteriorated significantly due to the impending coronavirus pandemic,” says Sabine Barthauer, German Hypo Executive.
Specifically, the barometer value fell by 10.5 to 100.5 points, a historic low. The scale ranges from 0 to 200. Values below 100 points indicate negative expectations.
It is no surprise that the hotel sector is identified as the one that reacts most sensitively: in Switzerland, all major events with more than 1000 visitors were temporarily prohibited by law, in France with 5000 or more visitors. For example, the Mipim real estate fair, one of the world’s largest events in the industry, which was scheduled for mid-March, was canceled. Trade fairs have also been canceled in Germany, such as the world’s largest tourism fair ITB in Berlin.
Real estate service provider Cushman & Wakefield also sees the hotel sector most clearly affected by Corona. The analysts show the effect this can have with a historical comparison: During the Sars epidemic at the beginning of 2002 and 2003, the number of visitors from China and Hong Kong in the USA dropped by a quarter.
Today, around three million Chinese visit the United States annually, and the impact could be even more drastic for hoteliers than in the early 2000s: analysts Rebecca Rockey and Kevin write that Chinese tourism in the United States has practically come to a standstill as a result of the corona epidemic Thorpe in a comment.
Thomas Beyerle, head of research at the investment manager Catella in Germany, also sees the greatest risk of a drop in sales in the hotel and entertainment sector. He had already observed this with Sars in real estate in Asia. At the time, sales of real estate were also followed by losses in sales.
However, the real estate experts remain calm overall. From Cushman & Wakefield’s perspective, it is premature to predict the consequences of the corona virus for the property market. “The commercial real estate market is not the stock market. It is moving slowly and the rental fundamentals do not fluctuate wildly from one day to the next, ”Rockey and Thorpe write.
The Deutsche Hypo Real Estate Climate Index also shows that the mood on the office property market is stable. The fear of economic effects – after all, the OECD has lowered its expectations of economic growth – does not seem to have hit the office markets so far.
In the first quarter, investments in German real estate could be weaker than last, Beyerle von Catella suspects, because investors were cautious. Ultimately, transactions would not fail, they would only be postponed. In the course of the year, the investments could turn out to be higher than the long-term average.
And one more thing Corona could do, Beyerle conjectures: so-called Proptechs, as digital start-ups in the real estate sector are called, could also give the fear of the Corona virus a boost. In times of travel bans, the “People’s Business” real estate could lead to digital processes being pushed even more strongly due to the epidemic and the continued pressure to invest.
More: Why the Corona Fear Isn’t a Financial Crisis