This Weeks Take On Events In The World Economy And Their Fallout

The scale of global job losses caused by the coronavirus pandemic will become more apparent this week, as some of the world’s biggest economies release labor market data.

After last week’s report showing an historic jump in U.S. jobless claims, all eyes will be on next Friday’s payrolls data for more signs of the hit to employment — with most expecting the worst reading in a decade.

Japan, Germany, Italy and the euro region as a whole will also release labor market data that will reflect some of the impact of the pandemic.

Meanwhile, data from around the world covering activity, house prices and sentiment will give more insight into the depth of the economic slowdown, while central banks in Chile and Egypt set policy.

Here’s what happened last week and below is our wrap of what else is coming up in the world economy.

U.S. and Canada

The March jobs report on Friday will be the first to reflect the impact of business shutdowns to prevent the coronavirus’s spread, but the numbers — largely based on the week ending March 14 — probably preceded the worst impact, including what’s in the jobless claims report due Thursday. Even so, it could still be the first monthly payroll decline since 2010.

Claims are likely to show another massive wave of Americans filing for unemployment benefits in the week ended March 28, following the prior week’s record 3.28 million. Elsewhere, readings on consumer confidence and ISM surveys of manufacturers and service companies will show the extent of the virus’s hit on sentiment.

As the virus fallout continues to ravage economies across the region, the week kicks off with a monetary policy decisions in island economy of Singapore, which uses the currency instead of interest rates as its main tool and is expected to take aggressive steps to ease policy in order to reduce the pace of appreciation in the local dollar.

Tuesday’s China PMI readings for March will be closely monitored for signs the world’s No. 2 economy is starting to recover from its cratering in January and February. Regional manufacturing surveys follow on Wednesday. Also Wednesday, South Korean trade figures will be watched as a barometer of global commerce.

A slump in oil prices sent euro-area inflation tumbling in March, data due Tuesday will show. While a rate closer to zero than the European Central Bank’s goal of just below 2% would normally spark renewed discussion about an extra dose of monetary stimulus, economists and investors — and maybe even policy makers — might just shrug off this month’s reading as an inevitable consequence of the world’s most fundamental crisis since World War II. With most of European countries in lockdown and the coronavirus spreading furiously across borders, the ECB and the region’s governments have already unleashed measures worth several trillions of euros to support the economy.

U.K. data on Monday is set to show mortgage approval fell in February before the government moved to freeze Britain’s housing market in response to the coronavirus pandemic. GDP figures a day later are predicted to confirm the economy stalled in the fourth quarter.

The central bank of Egypt, the Middle East’s fastest-growing economy, is expected by economists to hold steady on Thursday after a record 300-basis-point interest-rate reduction at an emergency meeting following the Federal Reserve’s cut to zero. Governor Tarek Amer told Bloomberg on March 19 that the bank has “the power to neutralize the effect of the global turmoil on the economy, and we will use it.” South Africa’s manufacturing PMI on Wednesday will probably show sentiment in the sector has weakened even further as a 21-day lockdown goes into effect. In Turkey, inflation data on Friday is expected to show a slow-down to 11.8% in March.

Colombia’s central bank on Monday publishes the minutes of its policy meeting held Friday, where the board cut its key rate for the first time in two years as the economy reels from the coronavirus outbreak. All five of Latin America’s major central banks have reduced borrowing costs this month as the coronavirus spreads through the region.

A day later, Chile’s central bank meets just two weeks after cutting its key rate by 75 basis points — the biggest reduction since the global financial crisis — at an unscheduled emergency meeting. The government has committed to spending roughly 4.7% of GDP to backstop workers and businesses amid the pandemic yet policy makers haven’t ruled out further easing.

— Bloomberg