COVID-19 International Developments: Daily Scan, May 6, 2020
Prerna Gandhi, Associate Fellow, VIF
Strategic
Biden's edge evaporates as Trump seen as better suited for economy, coronavirus response: Reuters/Ipsos poll

Joe Biden’s advantage over President Donald Trump in popular support has eroded in recent weeks as the presumptive Democratic presidential nominee struggles for visibility with voters during the coronavirus pandemic, according to a Reuters/Ipsos poll released on May 05. Biden led by 6 percentage points in a similar poll last week and by 8 points in a poll that ran April 15 to 21. According to the poll, 45% of Americans said Trump was better suited to create jobs, while 32% said Biden was the better candidate for that. That pushed Trump’s advantage over Biden in terms of job creation to 13 points, compared with the Republican president’s 6-point edge in a similar poll that ran in mid-April. 37% said Trump was better leading the country’s coronavirus response, while 35% preferred Biden.

White House considers winding down coronavirus task force, as focus shifts to aftermath

The White House coronavirus task force led by Mike Pence could be wound down as soon as the end of the month, according to the US vice-president, even as the number of fatalities in the country spiked. Pence told reporters talks were under way about “what the proper time is for the task force to complete its work and for the ongoing efforts to take place on an agency-by-agency level”. President Donald Trump, who left the Washington area for the first time in weeks to visit a Honeywell plant in Arizona that manufactures respiratory masks, defended the timetable, saying the US could not be “closed for the next five years”. “You can say there might be a recurrence, and there might be,” Trump said at a round table discussion with Native American leaders from Arizona. “Most doctors, or some doctors, say that it will happen. It will be a flame and we are going to put the flame out.”

Coronavirus reached Europe weeks earlier than thought, say doctors

Retesting of samples from patients with influenza-like symptoms at a hospital north of Paris found one that tested positive for coronavirus from the end of last year, a finding described in a paper for the International Journal of Antimicrobial Agents published this week. “We had a positive Covid-19 case on December 27 who was hospitalised with us at Jean-Verdier [hospital],” Yves Cohen, head of intensive care for two hospitals in Seine-Saint-Denis, north of Paris, told France’s BFMTV. He was one of the contributors to the paper. “It’s not surprising when you consider that the World Health Organization has announced that it was circulating in China from December 8 at least. Given the amount of travel, it’s normal that the virus appeared quickly in France.” France reported the first Covid-19 death in Western Europe on February 15, when a Chinese tourist from Hubei died in a Paris hospital after arriving in the country on January 25.

70% see Japan-US security alliance in positive light: Japan Govt Survey

Nearly 70 percent of people in Japan value the bilateral ties the country maintains with the United States, a recent survey released by the Foreign Ministry indicates. The Japan-U.S. security treaty was signed in January 1960 and entered into force five months later.Under the treaty, based on a similar pact inked six years after Japan's surrender in World War II, the United States is obliged to defend Japan in the event it is attacked. To make that possible, the treaty allows the United States to station its military in parts of Japan. Some 54,000 U.S. troops are deployed to bases across the archipelago, the bulk in Okinawa. South Korea hosts about 28,500 U.S. troops. Asked in which areas Japan and the United States should strengthen ties, 78.8 percent of respondents named security, followed by exchanges of people and culture at 76.8 percent, and economy, trade and finance, at 74.7 percent. On the Middle East situation, a total of 70.8 percent said Japan should involve itself in efforts aimed at easing growing tensions in the region caused by factors such as Iran's nuclear programs.

China conducts naval drills in S. China Sea, prepares for post-pandemic US military provocations

Chinese military experts expect the US military to escalate provocations against China when the epidemic eases. Along with Liaoning; warships of the PLA Navy 35th Escort Task Group are also conducting exercises in the South China Sea. The destroyer Taiyuan, frigate Jingzhou and replenishment ship Chaohu conducted anti-piracy and live-fire shooting training there on May 02, CCTV reported on May 05. Beijing-based military expert Wei Dongxu told the Global Times on May 05 that the US has been sending reconnaissance aircraft to the First Island Chain to gather intelligence on China. Against these provocations, China needs to utilize its capability to grasp their activities and take appropriate countermeasures, Wei said. China can send warplanes to drive them away or launch electronic countermeasures to disrupt them if they come too close, Wei said. Once hit by COVID-19, aircraft carrier USS Nimitz has now left its port and is scheduled to be deployed to the Pacific this summer, US media outlet Navy Times reported on April 27. This means the US will finally have a carrier ready for operation near China since the disease broke out on four of its carriers.

China can counter Trump’s viral attacks by shelving phase two talks- Global Times

China has been firmly pushing back the outrageous accusations from US politicians, but if Trump and his deputies do not stop, China could announce an indefinite delay in starting phase two negotiations with Trump. First, the top priority for both China and the US should be dealing with the COVID-19 pandemic and its economic fallout. Second, there is still huge uncertainty surrounding Trump's re-election. Signing a trade deal with a US president who might be out of office in early next year would be a waste of time and energy. Third, with arguably the worst COVID-19 outbreak in the world, the US economy needs a trade deal more than the Chinese economy, which is already on a steady path to recovery. The time is firmly on China's side. Lastly, the focus should be implementation of the phase one trade deal. Above all, shelving talks would rid the US president of any hope to gain leverage for the phase two negotiations by launching vicious attacks on China. It would be another unmistakable signal for Washington that Beijing would not back down on core issues in trade negotiations whatever Trump or any other US official says or does.

Dubai is ‘fully prepared and has sufficient strategic food reserves’: says Crown Prince

Dubai has enough food reserves to sustain its residents despite the ongoing challenges of the coronavirus pandemic, Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum, the emirate’s crown prince, said in a conference meeting with other officials. Sheikh Hamdan discussed the national food security strategy with other officials during the meeting, particularly initiatives in food distribution, import, local production, safety, and waste management. “Despite the global challenges created by the outbreak of COVID-19, we are fully prepared, and have sufficient strategic food reserves to serve the needs of the community,” the crown prince said. “The needs of Dubai’s citizens and residents are our top priority and our specialized teams are working around the clock to manage the consequences of this crisis,” he added. Hamdan urged all relevant authorities to support the Dubai Food Security Committee “to manage our food security properly.”

Afghanistan’s government distributes free bread as prices soar amid coronavirus

Afghanistan’s government began distributing free bread to hundreds of thousands of people across the country this week as supplies have been disrupted during the coronavirus shutdown and prices have soared, officials and experts said. More than 250,000 families in the capital Kabul started receiving ten flat ‘Naan’ breads per day in the first phase of the project. President Mohammad Ashraf Ghani has said the bread distribution programme was also taking place in other cities as rising prices were hitting what is already one of the poorest countries in the world, with more than half of the population living below the poverty line. Kabul’s headline inflation was an annual 7.5% in April and food inflation stood at 16.7%, said Omar Joya, an economist at the independent Biruni Institute think-tank in Kabul, who had access to the government’s latest consumer price data. “Given Afghanistan’s high dependence on imported food and non-food products, disruption in trade as a result of border closures can have a severe impact on domestic inflation,” Joya said.

Australia to teach Indo-Pacific veterinary surgeons to detect infectious diseases before they leap from animals to humans

After decades of patchy global investment into researching the linkages between animal and human health, more than 40 scientists will embark on an Australian government-funded programme that will teach veterinary surgeons in Southeast Asia and the Pacific how to detect infectious diseases – before they make the leap into the human population. Detecting diseases early in the animal population would help prevent future outbreaks among humans. To that end, the Australian government has pledged A$4.3 million (US$2.8 million) to the three-year project that covers 11 countries across the region. It’s part of an existing A$300 million (US$193 million) Indo-Pacific programme that pushes for a more proactive approach to fighting pandemics and strengthening health security.

Economic
‘Worst is over’ as oil stages a comeback

Oil markets breathed a sigh of relief on May 06 amid tentative signs that the global glut of crude was being drained. Brent crude, the Middle East benchmark, traded above $30 a barrel for the first time since the middle of last month. It rose by $3.77, or 13.9 percent, to close at $30.97 a barrel. West Texas Intermediate, the US standard that collapsed into negative territory last month, gained $4.17, or 20.5 percent, to settle at $24.56 a barrel. Western markets had the weekend to assess the impact of the big OPEC+ cuts that came into effect on May 01, and liked what they saw. Two of the world’s biggest investment banks said oil markets had bottomed out, and predicted a mild recovery. Goldman Sachs said production has started to decline quickly, and raised next year’s forecast prices to $51.38 per barrel for WTI and $55.63 for Brent. Morgan Stanley forecast Brent to rise steadily to $35 by the end of the year. The bank did not expect an immediate rally but “the greatest mismatch in supply/demand is probably behind us,” it said.

How soon will economies recover from the coronavirus pandemic? Look to China for answers

How will the Covid-19 pandemic affect the world’s economies? Given that China was the first country to impose stringent lockdown measures, and also the first to lift them, an examination of China’s data could help us understand the impact of the coronavirus if one takes a sectoral approach. The manufacturing sector has recovered much more rapidly than certain service industries – industrial production saw a V-shaped recovery while retail sales showed a significant drop. Power consumption data highlights a more comprehensive but also worrisome trend in the service sector. Overall electricity utilisation in the service sector declined by 8.3 per cent in the first quarter of 2020; however, a 19.8 per cent drop was recorded in March alone, even worse than the 10 per cent decline in February. This indicates that there has been little improvement in consumption even after the lockdown measures were lifted. For countries where the lockdown is set to be lifted late in the second quarter, if China’s experience is any indication, it could take over three months to get the economy back on the path to normalcy. This suggests economic activity could return to normal levels as soon as in the last quarter of 2020.

European cities face transport challenges as lockdowns lift

As they prepare to lift France’s strict lockdown, city planners want to transform the east-west axis into a so-called bike highway from which passenger cars would be banned, although buses and taxis would be allowed. Before the crisis, Paris had been trying to double the ranks of cyclists to 20 per cent of commuters, and city leaders think Covid-19 could help their cause. “If everyone goes back to cars, it will be a nightmare,” said Jean-Louis Missika, the deputy mayor who also looks after town planning for Ms Hidalgo. “Our secret dream is that the temporary becomes permanent.” Other European cities are also leaning on cycling to take pressure off public transport: Milan is planning 35km of new bike lanes, and Brussels 40km. Crowded metros, buses and trains create favourable conditions for the virus to spread, but the routes they ply are also essential urban arteries, carrying key workers from suburbs to shops and offices. To ensure space on public transport is reserved for those who need it, municipal authorities are asking companies to allow people to work from home as much as possible and to stagger office hours to avoid congestion.

Aramco to store sterilizing materials

Saudi Aramco has given up some of its storage space in the fight against the COVID-19 pandemic. The world’s biggest oil company said that tanks in the Kingdom were being used to store raw sterilizing materials for the Saudi Food and Drug Authority ahead of their use in the fight against the virus. Facilities belonging to Saudi Basic Industries Corporation are also being used to store more than 6,000 tons of material. Oil storage is at a premium worldwide as industrial and transport demand for energy plummets in the global lockdown. Some experts have warned that the oil industry faces “tank top” — when all available land and sea storage is full — later this month. The use of Aramco’s storage facilities are one of several initiatives announced by the company during the health crisis.

U.S. Services Businesses See Biggest Drop in Activity since Last Recession

U.S. services businesses saw their steepest drop in activity in April since the last recession as the coronavirus pandemic gained momentum, surveys of purchasing managers showed. The Institute for Supply Management’s nonmanufacturing index fell to 41.8 in April, down from 52.5 in March and the lowest reading since March 2009. Separately, private data firm IHS Markit said on May 05 its U.S. services index—a survey-based measure of activity in industries such as finance, hotels and transportation—saw its sharpest one-month decline dashing any hopes of a V-shaped recovery’.

EU to beef up scrutiny of money-laundering risks, adds Panama to list

The European Commission aims to intensify its scrutiny of states posing money-laundering risks, and is looking into creating a new body to help police financial crime and monitor banks more strictly, draft documents seen by Reuters show. One document, expected to be published on May 07, adds Panama and other countries to an existing blacklist but spares Saudi Arabia and U.S. territories that had been put on an earlier list before being shelved in the face of objections. A second document, also due same day, suggests giving the European Union more powers to tackle financial malfeasance within the bloc after a spate of scandals at large banks dented the EU’s reputation. The proposal, still subject to changes, says the EU could set up by 2023 a common supervisory body in charge of carrying out inspections at banks and possibly empowered to impose sanctions and identify suspicious payments.The revised money-laundering list, expanded to include 22 from 16 states, is set to take effect from October.

Have investment funds averted a liquidity crisis?

In the third week of March, when the dizzying market swings caused by the coronavirus emergency were at their peak, the eyes of the investment world were fixed on the $3.8tn US money market fund sector. An investor exodus from US prime institutional funds left portfolio managers scrambling to sell assets, threatening their liquidity profiles and paving the way for fund suspensions. Yet the investment industry’s worst fear — that the liquidity crunch would spiral into a widespread run on funds as when the Reserve Primary fund “broke the buck” in 2008 — did not materialise due in part to interventions by the US Federal Reserve. While it is an extreme example, the disaster averted for money market funds mirrors the picture for the wider $55tn asset management industry, which has emerged from the recent market turmoil scared and shrunken but largely intact. Just 80 funds out of the near-35,000 sold in Europe were suspended in March, despite investment groups being hit by record outflows and precipitous drops in asset prices, according to Fitch Ratings. “Given that this was the worst crash since 1929, it’s extraordinary that the majority of open-ended funds are still operating,” says Julie Patterson, head of asset management, regulatory change at KPMG.

Hong Kong takes steps to become a green financing hub

Hong Kong on Tuesday made its biggest push to date in its bid to become a green financing hub and capture a slice of the market that is expected to be worth US$350 billion this year. The effort to develop green financing comes as the city needs to generate new growth engines to boost its weak economy, which has been hurt by the US-China trade war since 2018, the social unrest last year and the ongoing coronavirus pandemic. Hong Kong’s economy slumped 8.9 per cent in the first quarter, the worst contraction since records began in 1974. Seven financial regulators and government bureaus, led by the Hong Kong Monetary Authority and markets watchdog Securities and Futures Commission, set up a cross-agency body – Green and Sustainable Finance Cross-Agency Steering Group – to promote the initiative. They will be joined by the Insurance Authority, Mandatory Provident Fund Schemes Authority, Hong Kong Exchanges and Clearing, Environment Bureau and Financial Services and the Treasury Bureau.

US trade deficit with China shrinks 26% in March amid virus outbreak

The U.S. goods trade deficit with China shrank 26.0 percent in March from the previous month to $11.83 billion, the lowest since March 2004, amid the coronavirus outbreak, the Commerce Department said on May 05. The deficit with Japan increased 21.8 percent to $5.57 billion, making the country the fifth-biggest deficit generator for the United States after China, Mexico, Germany and Ireland, according to the department. Under his "America First" mantra, President Donald Trump has pledged to reduce U.S. trade deficits with major trading partners and has reached partial trade deals with China and Japan. But the coronavirus pandemic is affecting trade worldwide as businesses have shuttered and people have stayed at home in an effort to slow the spread of the highly contagious virus. Globally, the U.S. deficit in trade in both goods and services expanded 11.6 percent to $44.42 billion as exports decreased more than imports. The U.S. exports contracted by 9.6 per cent to $187.75 billion- the sharpest monthly decline on record- according to the department.

Medical
The race towards a coronavirus vaccine: What's the latest?

Since the start of this year, pharmaceutical companies and institutes worldwide have been conducting research to try to find a vaccine against the coronavirus SARS-CoV-2. So far, the German Association of Research-Based Pharmaceutical Companies (VFA) has identified 115 different vaccine projects, while the World Health Organization (WHO) count is 102.The main focus of research is on three types of vaccines: live, inactivated, and DNA or mRNA vaccines. But what is the difference between them? The starting point for a live vaccine is a virus that is known, but harmless. It does not cause disease, but is able to multiply within the cells of our bodies. This is the vector which then triggers an immune response. The inactivated vaccines contain selected viral proteins or inactivated viruses. The dead viruses can no longer multiply, but the body still recognizes them as intruders, so the body's defence system ensures that antibodies are produced. The vaccinated individual does not develop the disease. Compared to inactivated vaccines with viral proteins, the advantage of gene-based vaccines is that the pharmaceutical industry can produce them quickly. It will have to be able to do this, because once a vaccine against COVID-19 is found, billions of doses will need to be made available to people all over the world in the shortest possible time.

Gilead in talks to expand global supply of COVID-19 drug remdesivir

Gilead Sciences Inc (GILD.O) said on May 05 it was in discussions with chemical and drug manufacturers to produce its experimental COVID-19 drug remdesivir for Europe, Asia and the developing world through at least 2022. The drug maker did not disclose details about the companies. With several countries across the globe reeling from the virus outbreak, interest in remdesivir has been high as there are currently no approved treatments or vaccines for COVID-19, the respiratory illness caused by the new coronavirus. Gilead last week received the U.S. Food and Drug Administration’s emergency use authorization for using remdesivir as a treatment against COVID-19, after the drugmaker provided data showing the drug had helped COVID-19 patients. Gilead also said on May 05 it was negotiating long-term licenses with several generic drug makers in India and Pakistan to produce remdesivir for developing countries and that it would provide technology to aid the production. One of Bangladesh’s largest drugmakers, Beximco Pharmaceuticals BXPH DH, will start remdesivir production this month, Reuters reported, citing a senior company executive.

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Image Source: https://upload.wikimedia.org/wikipedia/commons/f/f6/Coronavirus_SARS-CoV-2.jpg

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