US retail sales fall at record rate in April, Germany in recession; Wuhan tests 3 million residents

CORONAVIRUS ALERT 5/15/2020

The Atlantic Council’s Coronavirus Alert is a regular summary of policy, economic, and business events around the emergency. To stay updated, sign up to the Coronavirus Alert here.

In top stories today:

  • US consumer spending fell at a record rate in April as coronavirus lockdowns and job cuts started to bite, while Germany, the powerhouse of Europe’s economy, entered recession. Wuhan, the Chinese city at the center of the coronavirus outbreak, has tested three million of its 11 million residents so far.
  • Spending by consumers, the backbone of the US economy, fell by a record 16.4 percent in April as layoffs started to mount up and people went into lockdown, CNBC reported. Economists had forecast a 12.3 percent drop, CNBC said, adding that more than two-thirds of the nation’s $21.5 trillion economy depends on personal consumption.
  • Germany, Europe’s largest economy, entered recession after its gross domestic product declined 2.2 percent in the first quarter as shops and businesses closed in March to fight the spread of coronavirus, the BBC reported. While that’s the steepest quarterly contraction since the financial crisis in 2009, Germany fared better than France and Italy partly because the country’s sixteen states allowed construction sites and factories to stay open, the BBC added.
  • Wuhan, at the epicenter of the coronavirus outbreak in China, has tested more than three million people since April and will now focus on testing the rest of the city’s 11 million residents, Reuters reported, citing state media. Concerns about a possible second wave of infections were raised last weekend after the city reported a cluster of infections, the first since a lockdown was lifted on April 8, Reuters added.
  • QUOTE: “While mass Covid-19 testing might seem intuitive, its benefits are unlikely to meet the high expectations for it,” wrote Michael Hochman, associate professor of clinical medicine at the Keck School of Medicine of the University of Southern California, news service Stat reported. “[N]ot testing the entire population would not represent a nihilistic acknowledgment that Covid-19 cannot be controlled. To the contrary, reducing the focus on testing could enable greater attention on higher-yield efforts.”

CHINA SPAT

  • China said bilateral relations are in the best interests of both Beijing and Washington, responding to US President Donald J. Trump’s comments that he could cut ties with the world’s second-biggest economy, Reuters reported. Relations between the two nations have deteriorated steadily in the past few months as Trump and other US officials have increased their criticism of how China has handled the coronavirus outbreak, the news agency added.
  • Factories in China kept up a brisk pace of activity in April as they caught up on orders they struggled to fulfill earlier in the year because of the coronavirus outbreak, but Chinese consumers were slow to start spending again, The New York Times reported, citing official statistics out on May 15. Industrial production rose 3.9 percent from a year earlier while retail sales fell 7.5 percent.
  • “Caught in Trump-China feud, WHO leader under siege” reads the headline to a Reuters special report, referring to Tedros Adhanom Ghebreyesus of the World Health Organization (WHO). The twenty-minute read draws on interviews with WHO insiders and diplomats as the United Nations agency contends with a deadly pandemic and copes with hostility from its largest donor, the United States, Reuters said.
  • QUOTE: “Claims that China should carry the costs of a chance outbreak are nonsensical,” wrote the editorial board of the Financial Times. “They push instead Beijing to clam up over the virus, and step up its own aggressive counter-diplomacy.”

EQUAL ACCESS

  • French pharmaceutical giant Sanofi promised equal access for everyone to any potential coronavirus vaccine, following a row after saying that it would prioritize the US market, the BBC reported. CEO Paul Hudson’s remarks, reported by Bloomberg on May 14, had been distorted, Chairman Serge Weinberg told France 2 TV, the BBC said.
  • Dozens of residents in the wealthy Salamanca neighborhood of Madrid have protested each night in the past week to call for an end to the lockdown, still in place in other major cities including Barcelona and Valencia, while a phased lifting of restrictions has begun elsewhere in Spain, The New York Times reported. That echoes similar protests in the United States and elsewhere, the newspaper added.

DETROIT, ROBOT ARM

  • About 133,000 workers, or just over half of the auto industry’s labor force, are returning to production lines that reopen in the week ahead, the Associated Press reported, citing its own estimates. That, together with thousands of workers resuming production in the parts industry too, represents a ray of hope amid the jobs crisis, the Associated Press said in the article originating from Detroit.
  • Grocer Koninklijke Ahold Delhaize has stepped up efforts to develop a robotic arm connect to a mobile base as the coronavirus outbreak made the need to help workers process orders and clean stores more urgent, The Wall Street Journal reported. “Tempting back the terrified: shops and restaurants try to reassure customers,” reads a Financial Times headline.
  • Carnival, the world’s biggest cruise company, plans to cut 820 jobs and furlough 537 workers for up to six months as the pause on travel enters its third month because of coronavirus, the Associated Press reported, citing the company. Most of those affected in the United States will be in Florida, California, and Washington state, the news agency added.
  • “Africa’s endangered wildlife at risk as tourism dries up,” reads the headline to another Associated Press story. Poachers, like many of those desperate to make a living, might become more daring while tourists stay away because of coronavirus travel restrictions and their lack of spending makes protecting endangered animals such as black rhinos in Kenya more challenging, the Associated Press said.
  • QUOTE: “Endurance is patience. It is shortening your time horizon so you just have to get through this day,” David Brooks wrote in The New York Times. “Endurance is living with unpleasantness. In fact, it is finding you can adapt and turn the strangest circumstance into routine.”

AMAZONIAN TOLL

  • Communities in Brazil’s Amazon region—vast, isolated, and impoverished—have emerged as a flashpoint in the coronavirus outbreak in Latin America’s biggest economy, the Financial Times reported. By the time people from the indigenous population of one million, which suffers from little access to healthcare as well as low immunity, transport their sick relatives by boat to the river port of Manaus, many of the patients are already dead, the newspaper said.
  • The statistics say… The death toll in Brazil, at 13,000, is now the largest in emerging markets. Graveyards in Manaus used to bury thirty-five people a day in exceptional circumstances such as a prison riot, but the daily average now is 130, said Arthur Virgílio, mayor of Manaus, with a population of two million and surrounded by thousands of kilometers of jungle, the Financial Times reported.  
  • Mexico recorded its biggest daily increase in coronavirus cases, more than 2,409, taking the total tally beyond 40,000, the BBC reported. Industries including mining, construction, and auto assembly are scheduled to reopen partially on May 18, the BBC said. Assistant Health Secretary Hugo López-Gatell said it’s “the most difficult moment of the first wave of the epidemic” in Mexico, which plans a broader start of business on June 1 including factories near the US border, the BBC added.
  • Years of poverty, conflict, and instability have left Somalia ill-equipped to contend with the coronavirus crisis, with only one up-to-date quarantine unit for 15 million people, the Associated Press reported. While the official count of cases is 1,200, with fifty-three deaths, according to John Hopkins University, aid groups and even authorities fighting the virus say that could be far too low in a country with one of the world’s weakest health systems after three decades of civil war, the Associated Press reported.
  • READ MORE: The Atlantic Council presents a timely discussion on how coronavirus is influencing the information environment in the Caucasus nations of Armenia, Azerbaijan, and Georgia. Details of the online event on Tuesday, May 19 at 7:00 am EST are here.

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