FRANCE just gave a real snapshot of how bad the coronavirus (Covid-19) outbreak will be for the rest of the world.

There have been devastating economic projections made for how some of the most developed countries in the world would be hurt by the disease and France said its GDP fell by 6% in the first quarter.

The scary thing was the last two weeks of March when economic activity plunged by 32%.

There is no doubt the second quarter for most countries in the world will be crash-like numbers never seen since records began.

The outlook for the US is not good at all, with reports suggesting its second quarter may be the biggest fall on record.

The same is for Organisation for Economic Co-operation and Development (OECD) countries where the crash of economic activity is much like what France is experiencing. There is little or no escape from the initial economic pain.

In Malaysia, we too were given a glimpse of what to expect. Bank Negara, in its full-year outlook, projected the economy to contract by 2% or grow by 0.5%, with consumer spending projected to carry the load by registering a growth of 4.2% for the year and public consumption up 5.9%.

The survey by Statistics Department on consumer spending patterns during the movement control order (MCO) showed a 47.7% contraction in spending. Only three things were up and that is basically food.

That’s to be expected, given Malaysians are now cooking mostly at home as opposed to buying their meals from restaurants.

The biggest falls were seen in items such as clothes and footwear (-94.9%), transport (-89%) and hotels and restaurants (-86.5%)

Those numbers are not surprising as we can see it for ourselves. Our spending patterns reflect those statistics and what the department also said was that much of the fall was seen among the T20 segment.

Basically, the more well off you are, the bigger the fall in spending is in absolute terms and even by percentage.

The T20 has the largest discretionary spending ability and in times of uncertainty, they are the group that has pulled back the most.

The B40 segment did not cut back as much because of a lesser quantum of discretionary spending by that segment.

The T20 and M40 make up the bulk of consumer spending in the country but the question is how will those patterns change when there is a reprieve in infection rates from the Covid-19 disease.

People will be cautious. No doubt. There will be the fear of the virus entering into another wave that can change everything again and that’s why the biggest spenders will still be misers for some time. It’s a prudent wait-and-see approach.

People will need to make sure their jobs and companies they work for are secure from the vagaries of the disease before they start splurging their cash.

But when confidence does return, and it will be just a question of when, the pent-up demand should translate into a wave of spending.

The rebound will come but the how and when is undetermined.

A vaccine will put an end to the fears fast but the public health officials throughout the world can only take the steps to ensure our safety before we do our part in rebuilding the economy.

https://www.thestar.com.my/business/business-news/2020/04/09/unrestricted-thoughts---virus-vs-growth