The global economy is heading into a recession this year, as countries shut down one after another. We have only seen a few data pieces for March and it already shows that manufacturing and services are heading towards a big slump. But, April will be even worse. Italy has been hit the hardest so far, but Spain is catching up, as the death toll rises above 10,000 and with more than 100,000 people infected.
Governments and central banks have thrown the kitchen sink at the economy, with different stimulus programmes, while EU officials are commenting about bailing out countries in the Eurozone. EU’s Gentiloni made some comments about a bailout for Italy. The PPI report is also listed below:
EU’s Gentiloni Remarks
- Each month of lockdown causes 3% annual GDP slump
- There’s no discussion about an Italian bailout
Eurozone PPI Inflation Report
- February PPI -0.6% vs -0.4% m/m expected
- January stood at +0.4%, revised to +0.2%
- PPI YoY at -1.3% vs -0.8% expected
- January YoY stood at -0.5%, revised to -0.7%
His headline comment is one that I think many people will have a debate about when interpreting GDP readings in the coming months. It makes sense to reflect on the quarter-on-quarter reading if you seasonally adjust the data to remove one-off hits like the virus impact. Although, if the pandemic comes to an end, we will see a V-shaped recovery of the global economy.
But, a stimulus package for Italy from the EU will be very welcome, considering that the Italian economy was stagnating even before the virus hit the country. The PPI (producer price index) numbers for February are also lower, but that is due to the fact that Crude Oil started declining last month on the Russia-Saudi Arabia war.