This Week Ahead: US and Eurozone GDP

This Week Ahead: US and Eurozone GDP

The Coronavirus pandemic, which began with China’s first reported death on January 11th, has since devastated global economies. This week, critical indicators that usually signal the health of the global economy will instead reflect the pandemic’s damage. The following events are important to watch in the coming days, as they will provide insight into the economic toll of the crisis. All dates are in NZST.

China’s Inflation Rate – Tuesday, May 12th

China’s strict lockdown measures have decimated consumer demand, despite the country’s efforts to avoid rate cuts, opting for bond issues and direct lending. The People’s Bank of China (PBOC) expects inflation to slow, with analysts predicting a 3.7% inflation rate, down from 4.3%. This marks a key indicator of the pandemic’s economic effects in China, where consumer spending has sharply declined.

US Inflation Rate – Wednesday, May 13th

The US government has focused on stabilizing household finances, issuing stimulus checks, and implementing an unlimited quantitative easing program. While these measures are vital to keeping the economy afloat, they are expected to drive inflation in the long term. Analysts are forecasting a decrease in inflation from 2.1% to 1.7%, reflecting the balance between emergency stimulus and potential future inflation concerns.

Interest Rate Decision by the Reserve Bank of New Zealand (RBNZ) – Wednesday, May 13th

New Zealand, with its low coronavirus fatalities, has responded quickly to the crisis. However, its economy has still been impacted by reduced demand. The RBNZ is expected to maintain the benchmark interest rate at 0.25%, and analysts predict that the central bank will double its quantitative easing measures to support the economy.

UK GDP – Wednesday, May 13th

The UK has been one of the hardest-hit countries, with a high fatality rate and extensive lockdown measures. Analysts are forecasting a sharp GDP contraction, revising growth from 0.1% to -2.9%. This is largely due to the economic disruption caused by Prime Minister Boris Johnson’s illness and the ongoing pandemic, even as infection rates begin to decline.

Eurozone GDP – Friday, May 15th

The Eurozone, known for its interconnected economies and open borders, has been significantly impacted by the lockdowns. With severe cases in countries like the UK and Italy, analysts are predicting a 3.3% drop in GDP, a stark contrast to last year’s 1% growth. This reflects the profound disruption to trade, travel, and economic activity across Europe.

US Retail Sales – Saturday, May 16th

The retail sector in the US has been hit hard, with March retail sales falling 8.4%. Clothing and accessories, in particular, saw a 50.5% plunge. JCPenney and Neiman Marcus have already filed for Chapter 11 bankruptcy. Analysts expect a further 12% decline in retail sales, highlighting the severe impact of lockdown measures on consumer spending.

The upcoming economic reports will provide crucial insights into how different regions are coping with the long-term economic effects of the pandemic. Keep an eye on these indicators to gauge the broader global economic recovery.