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COVID-19 Impact and Response in Armenia

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COVID-19 Impact and Response in Armenia COVID-19 Impact and response in Armenia March 26, 2020 THE GLOBAL SPREAD COVID-19 Confirmed Cases, Mar 26,2020 EVENT TIMELINE The number of daily new cases in China peaked after two months from the start of the spread of the virus. As a result of the undertaken measures the number of daily new cases has since been declining. During the past week only a few new daily cases were reported in China. The measures taken by China resulted in a sharp decline of economic activity in the country. However, as of today more than 80% of industrial activity has been recovered. The epicenter of the virus outbreak (Hubei Province), where a lockdown was announced on the 23rd of January, is on its track to recovery. The normalization of the situation is expected by early 2nd quarter. Currently the virus spread is accelerating in US and European Union, with Italy being the epicenter of the outbreak. WHO has announced a pandemic on the 11th March. The same day US enforced a temporary flight ban from the Schengen Zone. Countries are closing all businesses not deemed to be essential to the nation’s supply chain of vital requirements and stiffened fines for people leaving their homes. Taking the case of China into consideration, the normalization of economic activity in other countries can be expected in 2-3 months after undertaking the effective measures for limiting the spread of the virus. STATISTICS BY REGIONS (MAR 26,2020) Total Cases Deaths Recovered Active Cases Trend China 81,285 3,287 74,051 3,947 Western Pacific Region 18,632 267 5,309 13,056 Eastern Mediterranean Region 35,407 2,340 11,142 21,925 South-East Asia Region 2,839 107 195 2,537 European Region 279,039 15,915 29,635 233,489 Region of the Americas 112,149 2,106 2,999 107,044 African Region 2,458 46 74 2,338 World 531,809 24,068 123,405 384,336 0 10 50 100 500 5.000 40.000 100.000 Armenia 290 1 18 271 Source: Ourworldindata.org/coronavirus, WHO Source: Worldometers, WHO THE GLOBAL SPREAD THE GLOBAL SPREAD IS ACCELERATING WITH MORE REPORTS OF LOCAL TRANSMISSION Impact > 530.000 > 24.000 REPORTED CONFIRMED DEATHS to date CASES > 200 > 100 ~ 90 COUNTRIES OR COUNTRIES OR TERRITORIES COUNTRIES OR TERRITORIES TERRITORIES WITH WITH EVIDENCE OF LOCAL WITH MORE THAN REPORTED CASES TRANSMISSION 100 REPORTED CASES CH 26, 2020 < 0.2% ~ 60% > 10 CHINA’S SHARE OF NEW REPORTED CASES NEW COUNTRIES S OF MAR NEW REPORTED CASES ON MARCH 20-26 WITH CASES T A MARCH 20-26 FROM EUROPE MARCH 21-26 TES LA Source: Worldometers, WHO THE SPREAD IN ARMENIA COVID-19 daily confirmed cases in Armenia Mar 20 1 Mar 2011 Mar 2012 Mar 2013 Mar 2014 Mar 2015 Mar 2016 Mar 2017 18 Mar 2019 Mar 2020 Mar 2021 Mar 2022 Mar 2023 Mar 2024 Mar 2025 Mar 2026 Mar 20 EVENT TIMELINE On February 24 after sharp increase of Covid-19 in Iran Armenian government decided to close the land border with Iran for two weeks and make some restrictions in air communications. On 1 March 2020, coronavirus pandemic was confirmed to have spread to Armenia when its first case was confirmed. Prime Minister Pashinyan announced closure of all educational institutions, including schools, universities and kindergartens. On March 11, three people who had arrived from Italy, including two Armenian citizens and one Italian working in Armenia, also tested positive for COVID-19. On 16 March, Government declared a state of emergency lasting until 14 April to prevent the spread of the coronavirus. On 20 March The National Assembly of Armenia adopted penalties for the violation of the request to be isolated or self-isolated providing a fine of 300-500 times the minimum wage, but if the same action has led to mass spread of the disease the person will be punished by 3 months remand or imprisonment for maximum 5 years. A violation of the restrictions on publication of information is also subject to a fine. As of 26 March, there are 290 confirmed cases. Armenian government ordered the closure of all cafes, restaurants and most other businesses due to a continuing spread of coronavirus in Armenia From 25 March every person is required to complete a movement sheet each time before leaving home during the emergency. On 26 March, the first death was recorded. Source: Worldometers, WHO PUBLIC EXPECTATIONS THE CORONAVIRUS WILL HAVE A FINANCIAL WHAT LEVEL OF THREAT DO YOU THINK THE CORONAVIRUS IMPACT ON YOU AND YOUR FAMILY ? POSES TO YOUR JOB OR BUSINESS ? WHAT LEVEL OF THREAT DO YOU THINK THE CORONAVIRUS POSES TO YOUR COUNTRY ? Majorities in most countries foresee a personal financial impact Rapidly increasing concern about threat posed to “Your job or business” Rise in perception of threat to country, especially in countries where confirmed COVID-19 cases rise rapidly The spread of the virus creates negative economic expectations for consumers and business, which can have a long-term effect on world economy Source: IPSOS, March 12-14,2020 MARKETS’ REACTION All major equity market indices are down The US Dollar interest rates are declining. On Except for oil, prices in the commodity markets sharply amidst the uncertainties related to COVID 15th March, the US Federal Reserve cut its policy rate are declined relatively little. The recent drop in oil 19 spread Compared to the beginning of the year, to 0 -0.25% and scaled up its quantitative easing price echoes the price war between Russia and Saudi MSCI China declined by 16, S P 500 by 29, MSCI tools to stimulate the economy amid the risks Arabia. The oil price had been decreasing even World by 30 and FTSE 250 by 38. Investors are associated with COVID-19. On the backdrop of before, amid declining global demand due to COVID looking for relatively safe assets. falling equity indices, safer investment is becoming 19. The relatively little decrease of prices in more attractive, increasing demand on US Treasury commodity markets indicate that demand and securities. expectations regarding the global economic growth has not declined to an extent that the oil price would indicate. THE GLOBAL ECONOMY GROWTH EXPECTATIONS CHANGE IN GDP GROWTH IN 2020 RELATIVE TO BASELINE, PERCENTAGE POINTS On the assumption that the epidemic peaks in China in the first quarter of 2020 and outbreaks in other countries prove mild and contained, global growth could be lowered by around ½ percentage point this year relative to that expected in the November 2019 Economic Outlook. Accordingly, annual global GDP growth is projected to drop to 2.4% in 2020 as a whole, from an already weak 2.9% in 2019, with growth possibly even being negative in the first quarter of 2020. Prospects for China have been revised markedly, with growth slipping below 5% this year, before recovering to over 6% in 2021, as output returns gradually to the levels projected before the outbreak. The adverse impact on confidence, financial markets, the travel sector and disruption to supply chains contributes to the downward revisions in all G20 economies in 2020, particularly ones strongly interconnected to China, such as Japan, Korea and Australia. Provided the effects of the virus outbreak fade as assumed, the impact on confidence and incomes of well-targeted policy actions in the most exposed economies could help global GDP growth recover to 3¼ per Note: Simulated impact of weaker domestic demand, lower commodity and cent in 2021. equity prices and higher uncertainty. Base-case scenario with the virus outbreak centered in China; broader contagion scenario with the outbreak A longer lasting and more intensive coronavirus outbreak, spreading spreading significantly in other parts of the Asia-Pacific region, Europe and widely throughout the Asia-Pacific region, Europe and North America, North America. Commodity exporters include Argentina, Brazil, Chile, Russia, would weaken prospects considerably. In this event, global growth South Africa and other non-OECD oil-producing economies. could drop to 1½ per cent in 2020, half the rate projected prior to the Source: OECD interim Economic Assessment, 2 March 2020 virus outbreak. Source: OECD ECONOMIC SITUATION IN ARMENIA AND TAKEN MEASURES The continued spread of coronavirus worldwide significantly increased uncertainties in the world economies and financial markets, reflected in the continued decline of developed countries' stock indices, the decline in commodity prices, the devaluation of the currencies of developing countries, and consequently, the impact of this on the Armenian economy is estimated to be deflationary by the CBA. According to the CBA estimates, these effects are also reflected in the simultaneous reduction of aggregate supply and demand in the behavior of the Armenian economy. The main impact is on the services sector, especially the sub-sectors related to tourism and entertainment, and export based industries. TAKEN MEASURES: Given the CBA price stability objective and assessing the current inflation developments, future impacts of the world economy and the uncertainties created, the CBA Board reduced the refinancing rate by 0.25 percentage points. The Government of Armenia initiated an unprecedented economic package of 300 million USD to soften the impact of the current situation. A part of it will be directed to a targeted aid and the major part will be flexible financing opportunities for businesses. Starting from 18th March, the construction of a new modular facility has started for “NORK” Infection Clinical Hospital. The Treasury Account has been opened to support the prevention and treatment measures of COVID-19 in the Republic of Armenia BASELINE SCENARIO BASELINE SCENARIO DESCRIPTION China and East Asian countries continue their current recovery and control over the virus by late Q1 or early Q2 2020 European and US case count growth continue to rise rapidly until mid – April.
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