COVID-19 Spread; Implications for Travel Retail

There are today over 60 thousand confirmed cases worldwide which must necessarily prompt questions about the rate of spread in the coming days and about the reliability of the historical data.

The crucial issue, hardly a technical one, is whether the development of cases is exponential or not, because if it is exponential and remains so, the outlook for Travel Retail is challenging:

By inspection it would appear that the curve is presently exponential and yesterday it might have been possible to postulate that the rate of growth is easing.

Today, with the new China numbers, that is no longer tenable.

The easing had been confirmed in our Growth Index analysis which looks at the rate of multiplication simply by dividing the cases each day by the cases on the previous day where any increase over 100 is a good indicator of exponentiality.

The evidence of a slowdown is compromised by today’s China figures and, irrespective of whether these are sins of omission or commission, there are at least four important caveats:

✓ the distribution of the epidemic is extreme and fat-tailed, which means that it spreads in a non-linear way, hence conventional risk-management processes are less effective.

✓ because it is fat-tailed the incidence of spread is more random than normal, hence

✓ there are dangers in assuming that any deceleration will hold; experience of previous epidemics in this century supports the point because

✓ the reproductive ratio is biased downwards, in part because of super-spreader events which are themselves fat-tailed.

The present traffic forecast set makes no judgement as to the future spread of the virus; it is more in the nature of a holding pattern where this month’s forecast is carried through to the end of the calendar year.

the author

Ian Robinson is the Air4casts Chairman, resident forecasting expert and general statistics whizz.

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