The june edition of the World Bank Global economic prospects which relates this conversation, 5 global contraction on global gdp in 2020. It is the deepest global recession since world war ii, and the biggest collapse in income since 1870. Its informed by an assessment fundamental drivers of a long time growth, which will slow capital formation. The dislocation of trade among others. Beyond the headline Economic Growth number, the pandemic is having a disproportionate effect and lower income countries, the large. Dominated by are the sector with limited ability to adjust for covid related measures like confinement. The most vulnerable population in the economy is more exposed. The pandemic is likely to leave a legacy of even wider inequality between and within countries and less the dimension is integrated. It was refreshing to see the report about covid and inequality. As disruptive as the pandemic has been around the world, there is still great uncertainty as to whether we have seen the worst case scenario. Notably, the epicenter of the pandemic appeared to the global south with the ability and where the ability to combat the virus is more omitted and response to the economy are elevated debt levels in several countries. The lack of sufficient Global Cooperation and coordination to fight the pandemic means the it will only means be as strong as the weakest link. We are seeing a resurgence of notably in the United States, causing polly make policymakers to dial back and despite encouraging progress the , timing for the discovery of a vaccine or treatment remains uncertain. The complexity of the current environment raises several questions in my mind. How successful is the economic outlook, particularly the rebound projected for next year, the timing for a reliable vaccine and treatment . What will be the long lasting effect of the pandemic the drivers of Economic Growth for Human Capital investment, but also critical sectors that were hit particularly hard . What do we make of the disconnect between main street and wall street where markets have largely recovered losses despite highly uncertain economic environment outlook . Are there any Silver Linings . When what we see a better and stronger economy . How can policymakers revive global activity which has been , threatened Major Economies in this Global Crisis . These are among the questions on when wes at brookings imagine what a postglobal pandemic can look like. We are lucky to have a Diverse Panel of expert and i look forward to the conversations which will be moderated by my following a representation by a colleague. Thank you. Over to you. Thank you for organizing this session. I am happy to be part of this distinguished panel. I will share my screen click way. Prospects in early june, because of time constraints im just going to focus on three point about shortterm implications of the pandemic. It will be a synchronized global recession. For emerging markets, it will be the first the session the economies will experience. Outlook. Er second point is the longterm implications of the pandemic. As we have seen before, following deeper sessions, there will be lasting scars. In the context of the pandemic, we are expecting big potential outlook over the longterm. Policy priorities are on the agenda to discuss and they crisis ise immediate the urgent priority but behind beyond the crisis policy , makers need to look forward at howrtaking policy measures do we see the Growth Outlook this year and next year . There is ais clear plunge in activity around the world. We are expecting Global Growth to be around minus 5. 2 this year. In the case of advanced economies, contraction will be large. With Global Growth for an extended time, being able to experience the first recession. It will see contraction about 2. 5 . If you look around the region, we see differences but a serious downturn is underway. In east Asian Pacific, we expect positive growth primarily china will be the only major economy giving positive growth by about maybe 1 . It will push Asian Pacific growth to around. 5 . Other than that, all regions will have historical contraction. Take the number in the caribbean. It will see a contraction it will see a contraction of has not seen in 100 years. 7. 2 . Will be around subsaharan africa, it east africa, central asian, regions exportersies with will see significant declines in growth rates. The commodity exporter will see historical contraction and we will contract by about 3. 2 . Next year growth will come back, recovery. Ect a modest this is a truly historical global recession. If we go back to 1870, we have reasonably good data. There have been 14 global recessions and each, you saw the Global Economy contracting. This will be the fourth global fourth deepest global recession. The deepest one since world war ii. Global recessions are important understand. Two of them associated with world wars. If you take them out, this global recession will be the deepest since 1870 after the great depression. Global economy will see the highest share of accounts experiencing contraction per capital households, slightly more than 90 this year. This is higher than what we saw than the great depression. There are risks down the road and they tilt to the downside. The single most important risk is a second wave of pandemic coming. If you look at where we are, the pandemic is under the control and the economies except the United States. If you take the United States out, the number of infections went down significantly since the beginning of march. The other hand, emerging markets, the pandemic is in full force. Caribbean, subsaharan africa, south asia, a significant increase in the number of infections. Limited Health Service capacity and testing capacity. So we have a limited understanding of the gravity of the pandemic in these regions. Beyond the shortterm, the pandemic will have longterm implications. There are large losses and output levels and they will not be recouped next year when growth comes back. In fact, if it happened during the 2009 global recession, we are not going to go back to pandemic numbers anytime soon. These types of deeper sessions and have longlasting scars onative effects productivity. Another important consequence of is how the Global Economy will generate growth. It will be constrained by the devastating shock we are going through. , longterme pandemic downwardowth had been since the Global Financial crisis. The010, forecasters thought Global Economy 10 years ahead would generate growth about 3. 3 . Below 3 ineclined 2014 and now it sits around 2. 4 . In all likelihood, the pandemic will have a long shadow over Global Growth expectations. Policyand monetary provided an overwhelming response to the crisis. Necessary butas sooner or later, there will be a that will come in the form of higher debt levels and deficit. It will be important for governments to basically try to withdraw the stimulus when the these policyd frameworks to reach sustainable levels. Its an important risk to Pay Attention to. And so faris turns it has not translated into the type of extended Financial Stress we saw in previous episodes of deep recession, but we should not deceive ourselves. As we saw after the Global Financial crisis, there may be repercussions associated with the Balance Sheets, especially of those economy. Priorities inlicy the short term helping the economy crisis is key and it requires systems helping helpingle groups and corporations to keep the economy flowing in an intelligent way. Policies globally is also critical and in this context, we need to provide for those economies, the poorest thisingmarket, they need in desperate times they are facing. If the crisis abates policymakers need to look and put in place policies for sustainable longterm growth. There are a number of important items. There is always a discussion about what is urgent. There are urgent policy issues here in the context of the aretterm and there critically important policy priorities we think about in the aftermath of the pandemic. Institutions and government practices will be critical in proving investment transparency to track the necessary growth will be important. Globallying policies to address global challenges, those providing necessary information that these types of challenges emerge. Global trade and financial are experiencing areements to push forward more friendly financial system. A small probability of emerging and when testing them so, can and do happen. In this context, its going to be important to address challenges associated with climate change. Leg we saw during the Global Financial crisis, there was a discussion about the shape of the recovery. Proposed. S have been i think the debate is useful for the trajectory we are thinking about as global economies struggle with the pandemic. But lets make no mistake about the nature of the recovery, whatever the shape, it will be painful. Providekers need to immediate comprehensive through howd think they will get there eventually to turn around the economy. Thank you. Thank you. Im hoping everyone can see the whole panel at this time. I am david, the director of the Hutchins Center at brookings and i am happy to be moderating the panel. Colleagued by my between brookings and cornell, which is why you have cornell on the background. Joyce is the chair of global morgan, she only has one employer. At thegentleman you met beginning of the program, the new Vice President for Global Economics and development at given hiswill join us interest in africa. I want to start with joyce. I am interested and whether your view of the World Economy matches the one that was just laid out and what you see in emerging markets. You talk in your recent report about a powerful growth in the second half of the year in emergingmarket. This is a diverse set of market. Latin america is different from our, which is different from china. How do you see the world and how do you see it differently and differently than the world bank . Choice joyce thank you so much for those questions and thank you for the Brookings Institution for the invitation and report. Let me start with the first question, why is there a disconnect between main street and wall street . Then i will go into the emerging markets discussion. The first thing, this time around compared to the Global Financial crisis, weve had an immediate proactive response from all the Central Banks emerging market Central Banks. , if you look at the size of the expansion of the Balance Sheet, we estimate its about 20 of gdp. If you compare that to the Global Financial crisis, thats about 6 of gdp. So you have expanded the Balance Sheet and more than three times what we saw in the Global Financial crisis. At the same time, look at how low Interest Rates are right now, we estimate nearly 70 of global Government Debt has a yield of 50 basis points or less. So youve got negative yielding debt and basically close to zero yielding debt for 70 of the market, and that has pushed money into the equity market. At the same time, market liquidity is poor here so you have to be careful you will have this return and volatility. We estimate the liquidity is about 60 weaker than it was in prepandemic. Thats the first thing to say about the disconnect between main street and wall street, the Balance Sheet is expanded by 3 trillion, they are on a buying spree of Epic Proportions here. But let me turn to the Growth Outlook and forecast and we agree this is the largest combined in 70 years and the Third Largest in 120 years. We have the advanced economy contracting by 4 and emerging market, if you take out china, we had China Growing one of the few countries growing positively to present you have a contraction of 6 or more in the emerging markets. I would say yes, we do see a rebound because the first half of the year, we had about 16 annualized drop in gdp. If you turn everything off, going to get the rebound. But thats not the easy part of the recovery. I would say it is an incomplete recovery with respect to the level of the gdp. The level of gdp at the end of the year, will be about four Percentage Points where it was prepandemic so youve got these numbers that are going to be printing, 20 of gdp in the second half of the year, but look at where we are in respect of gdp, 4 below where we were prepandemic. It is the income, productivity be veryt i think will large longlasting damage, but youve got another one or two and we would break that down to loehrl growth and liability and we are looking at the emerging markets. China has been doing better. And in recovery right now and tie juan. O the countries are doing much better. If you take aoo
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