Global Rate Cuts, Japan’s Tax Pains, China Back to Work: Eco Day

(Bloomberg) -- Welcome to Tuesday, Asia. Here’s the latest news and analysis from Bloomberg Economics to help start your day:

  • The global economic disruption caused by the coronavirus has prompted traders to load up on bets that central banks will have to ride to the rescue
  • Japanese housewife Matsuko Mitsui had been meaning to buy a new air conditioner for years, but it took the sales tax hike in October to spur the 64-year-old to finally make the purchase
  • China is gradually getting back to work -- but the economy is still operating far below capacity. We estimate it’s at 50-60% of its normal level, up from 40-50% a week earlier, writes David Qu and Chang Shu
  • The closeness of the Fed’s benchmark interest rate to zero may be lowering public expectations for inflation, adding a strong headwind against efforts to steer back up toward the 2% target. Meantime, Fed’s policy makers are cautiously confident they’ve got rates about right as they assess the fallout from coronavirus
  • IMF Chief Economist Gita Gopinath said the coming days will be key to judging how well the world is containing the epidemic, and warned that the economic impact could get much worse
  • Italy appears never far from a recession, and the spread of the virus may just tip it back into the danger zone
  • South Korea’s consumer confidence plunged as coronavirus spreads quickly in the country, blunting the momentum toward economic recovery. Meantime, the Bank of Korea is taking unprecedented actions in the face of the outbreak
  • As the Hong Kong government posts its first deficit in more than 15 years, all eyes will be on financial secretary Paul Chan’s budget release and how he’ll tap cash reserves to stimulate the economy
  • Flights grounded, schools shuttered and religious shrines disinfected, but as Iran struggles to contain the spread of coronavirus there’s panic, disarray and questions over who to believe
  • The epidemic is provoking another round of de-globalization discussion and President Donald Trump offered a tweeted flash at variation on that: De-globalization risks turning into de-Americanization, writes Shawn Donnan in the Terms of Trade

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