Coronavirus Beat Recession Resilience; Responding to Stimulus; Rebounding Stronger April 6, 2020
Today’s Agenda Todays Agenda
Time
Speaker
Introductions
5 minutes
Cara Nazari & Mamoon Sbeih
Spotlight: Attitudes and behaviors of the KSA public towards COVID-19 and how businesses and GCC governments are responding
5 minutes
Mamoon Sbeih
Spotlight: Economic scenarios for business in 2020
10 minutes
Rob Willock
Spotlight: How brands can help to “flatten the curve”
10 minutes
Nicholas Labuschagne
Spotlight: Role of media in communicating health emergencies and the impact of “info-demics.”
10 minutes
Nicholas Labuschagne & Liam Clarke
What’s Next?
5 minutes
Jeff Astle
Q&A
15 minutes
Moderated by Liam Clarke
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Introductions and Welcome Remarks
Cara Nazari
Executive Director AmCham Dubai
Mamoon Sbeih
President, MENA Region, APCO Worldwide
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Our speakers Mamoon Sbeih
President, MENA Region, APCO Worldwide
Nicholas Labuschagne
Head of Strategy and Crisis Management, MENA, APCO
Robert Willock
Director MENA, The Economist Corporate Network
Jeff Astle
Managing Director, Shanghai, APCO
Moderated by Cara Nazari
Executive Director, AmCham Dubai
Liam D. Clarke
Managing Director, Saudi Arabia, APCO
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Helping clients navigate COVID-19 Informed. Engaged. Ahead.
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Polling: n=503; 02.04.20 - 05.04.20
Economy: Spending has held up well, some caution anticipated on ‘Bounceback’ Reported Spending vs Before Crisis*
Projected Bounceback (All Spending Less)
17% 41%
41%
42%
42% 17% Imme diately return to normal Pu rch asing less
Sa me le ve l
Pu rch asing more
Wait, then re tu rn to no rmal Pu ch asing will ta ke a lon g time to return to normal
*Respondents were asked to discount purchasing which is currently unavailable (e.g. foreign travel) Excludes ‘don’t know responses Q1. Which of the following statements best describes your households purchasing at this present time?(In answering this question, please consider only purchases where you still have a choice not those where the option is not available at the moment, such as going abroad on holiday. Please also consider both essential purchases (e.g. food) and non-essential ones)
*Excludes ‘don’t know responses Q2. Now, thinking ahead to when life seems to be returning to normal, which of the following do you think are most likely?
6
Polling: n=503; 02.04.20 - 05.04.20
Economy: Reform seen as having made KSA economy more resilient; Confidence Saudi economy in stronger shape than rest of region Balance of Opinion – Agree vs Disagree*
The economic changes that have been taking place in Saudi Arabia in recent years mean the country is better-placed to recover from the Coronavirus crisis
76%
The Saudi economy will recover quicker from the Coronavirus crisis compared to other economies in the region
7%
81%
0%
10 %
20 %
30 %
40 %
Ag ree
7%
50 %
60 %
70 %
80 %
90 %
10 0%
Disagre e
*Clear space: those who neither agree nor disagree, or have no opinion Q3. To what extent do you agree or disagree with each of the following statements?
7
Polling: n=503; 02.04.20 - 05.04.20
Economy: Views on 120bn Riyal stimulus are split: There may be value in stronger communication on the individual benefits it confers % Selecting each option
“By investing in supporting the economy, the Government is taking the best route in supporting individuals such as myself and my family”
45%
45%
“I expect the Government to do more to help individuals such as myself and my family”
10%
“Don’t know / other opinion” Q4. The Government has recently announced that 120 billion riyals will be invested into the health sector and the economy (e.g. banks, financial institutions, small and medium enterprises). Thinking about this, which of the following statements comes closest to your view?
8
GCC Stimulus Packages KSA
UAE
• SAR 120bn worth measures to support the private sector including postponement of VAT/ excise/ income tax/ Zakat payments, exemptions of govt dues etc • SAMA’s SAR 50bn stimulus package: financing support for SMEs (including deferred loan payments, concessional loans) and coverage of points of sale & e-commerce fees • Initiatives to reduce private sector’s burdens related to manpower: e.g. lifting halts on non-payment of fines, fines related to workers recruitment etc. • Saudi Arabia will cut SAR 50bn (USD 13.32bn or less than 5%) of the 2020 budget • Stimulus at over SAR 9 billion to cover 60% salary of Saudi citizens working in private sector hit by the virus
• AED256bn stimulus including AED 50 billion capital buffer relief, AED 50 billion zero cost funding support, AED 95 billion liquidity buffer relief and AED 61 billion reduction of cash reserve requirements • Banks to reschedule loans contracts, grant deferrals on monthly loan payments + reduce fees and commissions • Dubai: AED 1.5bn stimulus package to support businesses affected by Covid19 including 10% reduction in utilities bills • Abu Dhabi: AED 5bn in utilities subsidies; free road tolls till end-2020, 20% rebate on rental values for restaurants + tourism & entertainment sectors (+ faster implementation of Ghadan-21 initiatives) • Dubai Free zones have announced measures to support the economy during the Covid19 outbreak: this includes postponement of rent payments up to 6 months
Source: Central Bank of UAE, Bloomberg, Nasser Saidi & Associates, Reuters, AL-Monitor
Bahrain BHD 4.3bn stimulus package: • Doubling the Liquidity Fund to BHD 200mn • Waiver on utilities bills for 3 months; • Delay in loans installments for 6 months • Providing 3 months wages of citizens in private sector for a total of BD 290m Central bank moves: • Banned lenders from freezing customers’ accounts in case of lost jobs or retirement • Cut overnight lending rate to 2.45% from 4% to ensure “smooth functioning of the money markets” (before Fed moves) Parliament: • Approved measures like reduction of commercial registration fees • Cabinet authorised the finance minister to directly withdraw funds with a 5% ceiling from the public account
Latest infection and death rate (April 6) 1 2 3 4 5 6 7 8 9 10 18 27 34 36 44 47 48 52 56 61 68 73 75 79
Country Total cases Deaths Recovered Active Deaths/m USA 336,830 9618 17,977 309,235 29 Spain 131,646 12641 38,080 80,925 270 Italy 128,948 15887 21,815 91,246 263 Germany 100,123 1584 28,700 69,839 19 France 92,839 8078 16,183 68,578 124 China 81,708 3331 77,078 1,299 2 Iran 58,226 3603 22,011 32,612 43 UK 47,806 4934 135 42,737 73 Turkey 27,069 574 1,042 25,453 7 Switzerland 21,100 715.0 6,415 13,970 83 Israel 8,430 49 477 7,904 6 India 4,298 118 328 3,852 0.09 Pakistan 3,277 50 257 2,970 0.2 Saudi Arabia 2,402 34 488 1,880 1 UAE 1,799 10 144 1,645 1 South Africa 1,655 11 95 1,549 0.2 Qatar 1,604 4 123 1,477 1 Algeria 1,320 152 90 1,078 3 Egypt 1,173 78 247 848 0.8 Iraq 961 61 279 621 2 Bahrain 700 4 431 265 2 Tunisia 574 22 5 547 2 Kuwait 556 1 99 456 0.2 Lebanon 527 18 54 455 3 Total: 1,274,265 69,471 264,833 939,961 8.9
Source: Worldometers.info
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China is going back to work But the recover in business activity has been staggered
Rob will provide information
• • • •
China peak was two weeks after lockdown For other countries this will vary depending on local policies & compliance Post-peak authorities have room to relax lockdown policies Consumers gain confidence in government response and panic lessens For more information CovidMENATeam@apcoworldwide.com
Impact on business activity
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Latest EIU COVID-19 scenarios Scenario
Containment
Economic impact
Return to normal
Concentrated in H1 Sharp rebound in H2 • China growth at ~4% • US ~1% • Global ~ 0%
4 months for BAU
Optimistic 10% chance
Gov’t response rapidly improves, CN/SG/KR path repeated elsewhere. Infections dissipate end-May elsewhere.
Baseline 50% chance
Outbreak under control by end-March in China, endJune EU/US, end Sept elsewhere.
Tourism + commodities weak all year • China growth ~0% • US ~-3% • Global ~-2%.
Rebound in 2021
Virus becomes endemic. Vaccine development takes a year.
Nationalist sentiment rises. • China growth ~-2% • US ~-4% • Global ~-4%.
Full recovery not until 2022.
Transmission everywhere. No vaccine. Bad policy responses. 1-3% of population dies.
Nationalism. State control over some companies. Goods shortages + mass layoffs.
???
Pessimistic 30% chance Nightmare 10% chance
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Economic scenarios for business in 2020 World: -2.2%
Selected MENA forecasts GDP growth Country 2020 Saudi -5.0% UAE -3.0% Qatar -1.5% Oman -2.1% Bahrain -2.5% Egypt +2.2% Iraq -3.6% Iran -12.0%
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Country forecasts
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Summary: activity in H1 2020 will be terrible
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How should brands behave during this crisis?
How should a responsible corporate citizen behave?
How has this crisis affected consumer psychology?
What should brands be doing?
What should brands avoid doing?
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Spotlight: Role of media in communicating this health crisis
Amplification of health authority communications
Domination of digital media
Fact-based communication, misinformation and disinformation
Value of visually rich communications
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What’s next? Lessons learnt from China COVID-19
•
Different stages of the COVID crisis – rippling around the world
China
• •
China – massive lockdown and health response – now in month 3 China now at risk of overseas returners reigniting the virus risk
Global Economy
• •
Economic impact in Q1 and Q2, and many sectors hit hard Global supply chains badly affected
•
Online services continue growth – education, communication, health, retail, entertainment Business responses – employees, local govt support, compliance
Business
Government
Lifestyle changes
•
•
Business tax / costs wavered, increased incentives and support for business Stimulus packages coming through – targeted to key sectors, and consumption stimulation measures Increased engagement with foreign invested business
•
Permanent changes - employee/working from home; technology; lifestyle & behaviors
• •
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Coronavirus Beat Recession Resilience; Responding to Stimulus; Rebounding Stronger
Discussion
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Coronavirus Beat Recession Resilience; Responding to Stimulus; Rebounding Stronger
Thank you to our supporting partners!
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