Covid-19 Natixis Asia Mobility and Policy Trackers: Tighter mobility restrictions are not accompanied by enough fiscal and monetary support

Natixis Asia Mobility Measures and Policy Trackers offer a summary overview of the 6 economies in the Covid-19 outbreak in Asia, namely Mainland China, followed by Hong Kong, Japan, Singapore, South Korea and Taiwan. This report aims at evaluating the short-term economic impact of Covid-19 in these economies by narrowly focusing on two aspects, namely (i) the degree of mobility (either physical mobility or restrictions on economic activities, such as sectoral closures etc); and (ii) the degree in which monetary and fiscal policies are coming to the rescue. To measure the two (mobility restriction and laxness of economic policies) in a way that is comparable across economies, we develop trackers based on the announcements and actions taken by governments. Details of all actions are offered as well.

Key messages

• Since China notified the WHO of the virus on 31 December 2019 and Covid-19 being declared global pandemic by 12 March 2020, the question of how to contain the virus and of what economic costs have gone global. In Asia, we have had a wide range of policy response to mitigate the social and economic fallout. In this report, we measure the mobility restriction measures, economic consequences and the monetary and fiscal responses to offset the decline of activity.
• We do so by classifying the degree of mobility restrictions due to health policies for each of the five economies reviewed (Mobility Tracker), categorizing how lax monetary and fiscal policies have been over time (Policy trackers) and looking into the immediate sentiment and economic impact of the two.
• China’s mobility restriction (especially that of Hubei) is clearly the most stringent as suppression health policies (rather than containment) were used initially. The rest of Asia adopted a containment strategy to prevent an outbreak but gradually moved towards suppression as cases started to rise faster.
• With stricter mobility suppression, China economic activity falls more than the rest but has gradually recovered as mobility improved. That said, other economies are starting to deteriorate too as they adopt stricter measures to limit mobility.
• As for the monetary and fiscal policies introduced, the support has been relatively limited when compared with US and Germany but, within Asia, Singapore and Korea seem to have done relevant monetary stimulus. They are so far the largest, although more support by other economies is likely coming. China, policy support, too, is getting more aggressive but more is needed.
• As mobility deteriorates in Asia (although gently improved for mainland China), our economic tracker of sentiment and activity shows deterioration of activities across the board and the stimulus thus far is not enough. This should call for more stimulus, especially in China and Japan, and the sooner the better. Furthermore, the fact that these Asian economies are all very open for their size, makes the problem potentially bigger as the US and Europe brace for a sharp recession.

Full report available for NATIXIS clients.