Economics COVID-19: A month of mobility restriction easing in North Asia

The use of public transportation network has improved significantly in key cities in North Asia, whereas public transportation use has remained largely muted in many other major cities across the world.

26 May 2020

The line chart demonstrates the use of public transportation in several Asian cities from the time period 15 January through 20 May.

North Asia economies took gradual steps to ease mobility restrictions

North  Asia  economies,  Korea,  Taiwan  and  Hong  Kong  have  all  moved  to  a  relatively  easier  mobility  restriction  protocol  in  early  May,  given  less  new  COVID-19  cases  were  confirmed  in  these  economies  since  mid-April.  For  example,  Korea  started  to  ease  the  "social  distancing  campaign"  on  6th  May  and  Hong  Kong  has  reopened  a  series  of  services and public facilities.

Further clustering and adopting "data dependent strategy" in reopening

Korea  reported  new  clustering  following  the  lower  alert  level.  It  reported  many  more  cases in 1H of May compared to that from 2H of April. The government has postponed the  reopening  of  schools  by  another  week  given  the  increased  new  cases  number.  In  addition, some schools decided to re-close again after reopening on the 20th May. The increases of new cases in mid-May also attributed to Hong Kong's decision to postpone the removal of public gathering constraint. Looking ahead, we believe governments in North  Asia  will  continue  to  follow  such  "data  dependent  strategy"  to  attempt  a  balance between containment and reopening.

UBS Evidence Lab data show significant improvements in domestic activity

The  UBS  Evidence  Lab  COVID-19  foot  traffic  monitor  shows  that  residents  have  been  "going out" since fewer new cases were reported and governments took gradual steps to  ease  mobility  constraints.  The  "pull  backs"  in  "going  out"  after  more  new  cases  reported suggest still high degree of public caution and "data-dependent behaviour" in resuming  daily  activity.  Similarly,  the  UBS  Evidence  Lab  Global  Traffic  Congestion  Monitor  and  Public  Transit  Network  Traffic  Monitor  both  showed  clear  trends  of  domestic  traffic  flow  improvements.  North  Asia's  domestic  traffic  flows  are  in  a  relatively  stronger  position  compared  to  many  other  economies.  Interestingly,  Seoul's  traffic speed has already slowed down to close to last year's level.

External demand condition remains rather challenging overall

May's first 20-days export shipment data from Korea shows another slump, suggesting the  overall  external  demand  condition  still  remained  challenging  into  the  middle  of  2Q2020.  External  demand  is  likely  to  be  the  key  drag  to  North  Asia  growth  in  2Q,  as  other economies are still at a relatively early stage in reopening the economy from the large scale lockdowns.

Tech export has been outperforming

It  is  worth  noting  that,  the  shipments  of  Korea's  DRAM  (Memories)  stood  out  to  be  rather resilient in the first 20-days of May, and their falls in the past months have been much  more  modest  compared  to  other  items.  Similarly,  Taiwan's  exports  also  showed  that  the  tech  exports  are  holding  up  better  than  the  non-tech  exports.  Given  the  re-escalation  of  US-   China  tension  and  further  technology  restrictions,    North  Asia's  tech  export  performance  is  probably  one of the  most  important  areas  worth  particular attention in the coming months.

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