Corona Count Doubt: What Say The Banks?

Corona Count Doubt: What Say The Banks?

Human Judgement

But even with a wealth of readily available data – both official and alternative – human judgment is key to avoid establishing assumptions simply due to perceived intuition or short-term trends. Credit Suisse’s Wang, for example, was recently posed with a hypothesis that a drop in electricity generation in China could suggest weaker economic growth. The bank eventually ruled out the indicator due to a small underlying sample size and subsequent conclusions that marginal price was, in fact, the biggest determinant of decreased electricity generation.

The same goes for how to interpret official government data and policy response, with each country obviously differing in distinctive ways that are hard to capture via purely quantitative means. From transparent liberal democracies to black-box regimes, the accuracy of reported figures will vary due to medical capabilities, counting methodologies and political drivers.

«All [our research] is done on an individual country basis – each economic team needs to make a judgment about the specific government policy response and what it implies for the economies under their coverage,» said Arend Kapteyn, global head of economics and strategy research at UBS. «There is no top-down model assumption being imposed because each country is different.»

Coronavirus Predictions

UBS said it does not specifically forecast the pandemic’s trajectory but focuses instead on mobility restrictions and expect such measures to be lifted by the end of the second quarter based on the research of the 41 countries it tracks. Citi’s global head of healthcare research Andrew Baum expects 90 million U.S. workers (70 percent of total worker population) to return as early as mid-May based on projections about testing kits and antibody diagnostics. 

Credit Suisse forecasts a Q3 rebound in the U.S., adding that China has overcome the worst assuming no second wave emerges. Goldman Sachs’ chief economist Jan Hatzius echoed Credit Suisse’s views on a Q3 rebound in the U.S. forecasting a quarter-on-quarter growth of 12 percent annualized.

«However, we don't know and governments don’t know so [we] are constantly adjusting our forecasts,» UBS’s Kapteyn added, underlining the unpredictable nature of the pandemic.