With the virus now at the gates of Europe, with the the spate of new cases reported in Italy, survey data are very likely to deteriorate rapidly in coming months.
A worsening of hard eurozone data is likely to follow since the fragility of global supply chains means even small disruptions in China’s output could still have large repercussions for Europe down the line.
For now, we continue to believe that the epidemic will be contained to the first half of 2020, so the German and eurozone industrial recovery will not be derailed but only delayed until the second half of the year. Of course, this outlook could deteriorate rapidly should the virus, now spreading to developed countries, fails to be contained.
