What is COVID-19 Doing to the Economy?

It’s a question on everyone’s mind, and on Feb. 25, CCBC members from across Canada (and even a few from China, in the middle of the night) listened to Danielle Goldfarb, Head of Global Research for RIWI Corporation, present the situation in statistical and analytical terms. RIWI collects data globally via a broad-based, random, anonymous methodology using machine learning technology. More than 58,000 responses from across China were referenced in the data presented in this members-only webinar.

Danielle cited Macropolo, which posited on Feb. 20 that the main challenge to economic recovery is consumer sentiment and the mass psychology of uncertainty. A recovery of demand is key, and if demand recovers, supply will follow. Chinese provinces are working hard to get supply ready for recovery. At a recent University of Toronto Munk School panel, a speaker highlighted the provinces to watch: Guangdong, Jiangsu, Shandong, and Zhejiang, which together make up almost 40% of GDP. It was noted that Zhejiang has been mobilizing transport to bring migrant workers back with buses.

Among the RIWI respondents, outbreak concerns have fallen significantly — 73% were worried about the outbreak on Jan. 26, falling to 57% on Feb. 24.  Respondents consistently felt that the COVID-19 situation would get better in the next week, dipping from a Jan. 28 starting point of 87% but landing at 92% on Feb. 24. People who feel it’s a good time financially to make a major purchase is currently at 37%, lower than the optimistic 42% on Jan. 7, but only two points lower than it was in March 2019.

Travel is one of the most impacted sectors, and consumers who don’t plan on traveling at all rose from 27% in June 2019 to 35% in February (the first time since June 2019 that “no travel” has exceeded plans to go somewhere). Planned travel in China fell from 33% to 29%. Planned travel to Canada dropped one point, from 6% to 5%, and to the U.S. from 12% to 10%. The RIWI data also showed that about ¾ of sales for groceries and cell phones occur online, and the proportion for apparel/shoes/personal care/beauty was in the mid-80% range. CCBC members who support online sales do tell us that many categories have continued to be strong in these channels over the past month.

Education is a longer-term planning sector, and RIWI asks an ongoing question about education, “Where should young people go for post-secondary studies in order to have the best career prospects?” Demand for Canada as an education destination rose slightly from 8% in June 2019, settling at 9% in February. The U.S. also rose a point, while Europe fell four points.

Confidence in the health officials of one’s country was most interesting. Chinese respondent’s confidence in their own health officials’ “ability to educate the public on avoiding or treating the new coronavirus” was at 81% on Jan. 26 but up to 90% on Feb. 24. In contrast, that same sentiment in Hong Kong is 53% and in the U.S. is 49% — not for Chinese officials, but for their own local officials.

Danielle’s presentation occurred just as COVID-19 was crossing an inflection point, with cases outside China exceeding those inside for the first time on Feb. 24. Now that the rest of the world is planning a response to the virus just as China is stabilizing, there is obviously much more to come. We will all be watching the progress week to week and will keep members apprised.

Missed the live webinar? Download the slides and see the presentation here.