Macro: Sandcastle economics
Invest wisely in Q3 2024: Discover SaxoStrats' insights on navigating a stable yet fragile global economy.
Head of Macroeconomic Research
Summary: Our 'Macro Chartmania' series collects Macrobond data and focuses on a single chart chosen for its relevance. This week, we look at mobility data released by Google in its COVID-19 Community Mobility Reports. The data are available on Macrobond.
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Google’s COVID-19 Community Mobility Reports are published on an ongoing basis, with the most recent statistics referring to the situation as it was two to three days ago (see here for further insights about the methodology).The two charts below show you the trend in terms of visits and length of stay in the retail and recreation sector at the end of last week both in developed and emerging markets. This sector is the most affected by the pandemic. It gives a real-time picture of the potential macroeconomic consequences of the re-introduction of restrictions in several countries to contain the spread of the variant Omicron.
Until one week ago, global mobility was generally improving. There was seasonal softness in Europe. But it was not worrying. European mobility was actually holding up relatively well. This was before the discovery of the new COVID variant Omicron. Mobility in Austria declined sharply following the re-introduction of a lockdown until 13 December. Visits to retail and recreation stores dropped 38% compared with the baseline in the week ending 26 November. Before the lockdown, mobility was low compared to other European countries. It was 18% below the baseline. The impact of the lockdown is, however, more limited than the lockdown which took place at the turn of the year in 2020. Mobility was down up to 73% in January 2021, for instance. In our sample for developed markets, Japan is the only country where mobility is back to pre-Covid level. From tomorrow, the country will close its borders to all foreigners again. But no further restrictions are introduced to limit mobility.
Europe is in a vulnerable position, in our view. The economic consequences of restrictions and lockdowns have diminished over time. But the continent is facing a perfect storm : the energy crunch, supply chain frictions, skyrocketing inflation and « pay me my worth » demands from workers on top of the fourth wave of the pandemic. GDP growth forecast in major European economies over the next three quarters has slowed over the last month, sliding to a six-month low in October. The risk of stagnation or recession has increased, especially for Austria and Germany. We are cautiously more optimistic for the other European economies. They seem less inclined to re-introduce strict restrictions and they are less exposed to the global trade turmoil. Think France or Italy.
In contrast, mobility in the largest emerging markets is back or above pre-COVID level. Taiwan is the only exception. Mobility was down 11% compared to the baseline in the week ending 26 November. The local policymakers and health authorities are reluctant to exit the zero COVID policy despite a very low number of new daily cases (12 cases on 26 November, for instance). Several emerging markets have been successful containing the recent evolution of pandemic until now (South Korea, India). Others are examples of « living with the virus » despite thousands of new cases daily and continuing deaths (South Africa, Brazil, Mexico). We have experienced the hard way that the situation can reverse fast with COVID. Uncertainties over the variant Omicron related to the transmissibility, vaccine effectiveness and risk for reinfections will push policymakers to be more careful than perhaps needed in the short term.