Fitch Solutions on US, Europe reopening when new cases still high

With the U.S. and several European countries still reporting thousands of new coronavirus cases every day, questions remain on whether they can safely ease restrictions aimed at curbing the pandemic anytime soon, an analyst from Fitch Solutions said on Friday.

Those restrictions, which include travel bans and temporarily shutting down businesses and schools, have brought much of global economic activity to a standstill. With some signs that the spread of the virus is slowing down, many governments are eager to restart their economies.

But Cedric Chehab, head of country risk and global strategy at Fitch Solutions, said China’s experience of rolling back those restrictions showed that there could be a new wave of infections.  

“China is reopening its economy in stages, but we’ve already seen some incipient risk of a second wave coming out of the city of Harbin,” he told CNBC’s “Squawk Box Asia,” pointing out that there was “upward pressure” on daily new cases reported when China started relaxing its measures.

“If you think about other countries such as the U.S., Spain and Italy, although the numbers of new cases have peaked, they’re still extremely high relative to what we saw in South Korea and China,” he said. “So the question is can they actually start to ease restrictions and open up the economies when they have such high number of new cases still.”

The U.S., Spain and Italy have reported the highest number of cumulative cases globally, according to data compiled by Johns Hopkins University. On Thursday, the U.S. reported more than 28,800 new cases, while Spain and Italy respectively added 4,600 and 2,600 cases to their tallies, Hopkins data showed.

U.S. President Donald Trump has on several occasions called for the easing of restrictions on people’s mobility — although he also said he won’t reopen the economy “until we know this country is going to be healthy.” But some states have loosened measures, such as allowing beaches and parks to reopen at specific hours.

Over in Spain, the government has allowed some factories and construction work to restart. Italian Prime Minister Giuseppe Conte said any relaxation in measures — which is likely to start from May 4 — will be done in a cautious and calculated manner.

Meanwhile, Asia Pacific countries appeared to be more cautious in easing lockdown measures.

New cases in China dropped to double-digit levels before the country lifted restrictions on Wuhan, the epicenter of its outbreak. New Zealand plans to start easing measures next week — after new cases stayed in single-digit levels the last few days. Malaysia extended its partial lockdown even though the number of new cases has dropped below 100 over the past week.

The recovery in the global economy depends on how quickly countries can get activity going again, said Chehab, who predicted that economies will feel most of the pain in the second quarter.   

“Hopefully we start to see a little bit of recovery by (the fourth quarter),” he said. “Of course, this depends on how fast countries are able to reopen their economies and starting to ease these lockdowns.”