Segnalazione dalla Banca Mondiale: il Global Economic Prospects Report

(...) We have just released the June 2020 edition of the Global Economic Prospects report—the World Bank’s semi-annual flagship publication on the state of the world economy. In a nutshell, COVID-19 has delivered an enormous global shock, leading to steep recessions in many countries. The baseline forecast envisions a 5.2 percent contraction in global GDP in 2020—the deepest global recession since the Second World War, and the broadest collapse in per capita incomes since 1870. In addition to discussing global and regional prospects, this edition includes several thematic pieces, all around the implications of the COVID-19 pandemic, including its likely long-lasting adverse effects on potential growth, how it compares with global recessions of the past 150 years, how it impacts oil markets, and how informality exacerbates its effects. I briefly summarize the main messages of the report below (to download the full report, please use this link). Thank you for your interest in our products. Best. Ayhan

Global Outlook: Pandemic, Recession: The Global Economy in Crisis. The COVID-19 pandemic has, with alarming speed, delivered a global economic shock of enormous magnitude, leading to steep recessions in many countries. The baseline forecast envisions a contraction of 5.2 percent in global GDP in 2020—the deepest global recession in eight decades, despite unprecedented policy support. Per capita incomes in the vast majority of emerging market and developing economies (EMDEs) are expected to shrink this year, tipping many millions back into poverty. The global recession would be deeper if bringing the pandemic under control took longer than expected, or if financial stress triggered cascading defaults. The pandemic highlights the urgent need for health and economic policy action—including global cooperation—to cushion its consequences, protect vulnerable populations, and improve countries’ capacity to prevent and cope with similar events in the future.

How Deep Will the COVID-19 Recession Be? Current projections suggest that the COVID-19 global recession will be the deepest since the end of World War II, with the largest fraction of economies experiencing declines in per capita output since 1870. Output of EMDEs is expected to contract in 2020 for the first time in at least 60 years. The current global recession is also unique in that global growth forecasts have been revised down more steeply and rapidly than in any other recessions since at least 1990.

Regional Macroeconomic Implications of COVID-19. The rapid rise of COVID-19 cases, together with the wide range of measures to control the spread of the virus, has slowed economic activity precipitously in many EMDEs. Growth forecasts for all regions have been severely downgraded. Many countries have avoided more adverse outcomes through sizable fiscal and monetary policy support measures. Despite these measures, per capita incomes in all EMDE regions are expected to contract substantially in 2020.

Lasting Scars of the COVID-19 Pandemic. Lockdowns and other restrictions needed to address the public health crisis, together with spontaneous reductions in economic activity by many producers and consumers, constitute an unprecedented combination of adverse shocks that is causing deep recessions in many advanced economies and EMDEs. Those EMDEs that have weak health systems; those that rely heavily on global trade, tourism, or remittances from abroad; and those that depend on commodity exports will be particularly hard-hit. Beyond its short-term impact, deep recessions triggered by the pandemic are likely to leave lasting scars through multiple channels, including lower investment; erosion of the human capital of the unemployed; and disintegration of global trade and supply linkages. These effects may well lower potential output and labor productivity in the longer term.

Adding Fuel to the Fire: Cheap Oil During the Pandemic. The outbreak of COVID-19 and the wide-ranging measures needed to slow its advance have precipitated a record decline in oil demand, a surge in oil inventories, and, in March, the steepest one-month decline in oil prices on record. In the context of the current restrictions on a broad swath of economic activity, low oil prices are unlikely to do much to buffer the effects of the pandemic, but they may provide some initial support for a recovery once these restrictions begin to be lifted. Like other countries, energy-exporting EMDEs face an unprecedented public health crisis, but their fiscal positions were already strained even before the recent collapse in oil revenues. To help retain access to market-based financing for fiscal support programs, these EMDEs will need to make credible commitments to a sustainable medium-term fiscal position. For some of them, current low oil prices provide an opportunity to implement energy pricing policies that yield efficiency and fiscal gains over the medium-term.

How Does Informality Aggravate the Impact of COVID-19? COVID-19 will take an especially heavy humanitarian and economic toll on EMDEs with large informal sectors. Participants in the informal sector—workers and small enterprises—are often not registered with the government and hence have no access to government benefits. Informality is associated with underdevelopment in a wide range of areas, such as widespread poverty, lack of access to financial systems, deficient public health and medical resources, and weak social safety nets. These vulnerabilities have amplified the economic shock to livelihoods from COVID-19 and threatened to throw large numbers of people into extreme poverty.

PS: For our other periodical products, please visit: Commodity Markets Outlook and Global Monthly. For our stock tacking of the performance of EMDEs since the global financial crisis, see A Decade Since the Global Recession. For details of our recent work on debt accumulation in EMDEs, see Global Waves of Debt. For our comprehensive database of fiscal space indicators, see A Cross-Country Database of Fiscal Space. For our study on the evolution and prospects of inflation, see Inflation in Emerging and Developing Economies. For our analytical work on topical policy issues, please visit Policy Research Working Papers.

M. Ayhan Kose

Director

Prospects Group

Equitable Growth, Finance and Institutions

World Bank Group

T +1 (202) 473-8350

E  akose@worldbank.org

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