Benefit of having a big civilization with lots of interactions, lots of people meeting people, doing business, creating. Good morning. Good evening, depending on where you are. Thank you for joining us. Senior fellow and Vice President of the Global Economy and development program, and brookings. The Global Economy is in perfect. The pandemic continues disrupting billions of lives, jeopardizing billions. The World Bank Global economic prospects which relates this conversation, its infraction on global gdp in 2020. This is the global recession since world war ii, since 1870. Its informed by an assessment fundamental drivers of a long time ago, a formation. The location of trade but headline Economic Growth number, having its proportionate effect and lower Income Countries, the large. There dominated the ability to adjust to covered religious measures such as confinement. The population in such the pandemic is likely to leave a legacy of inequalities between and within countries, and the dimension. For covid and inequality. As to whether the work is. Notably, the epicenter of the pandemic appeared to the global south with the ability and response to the economy are elevated in several countries. The lack of sufficient Global Corporation the pandemic means the global system remains full by its weakest link. The Global Economy eradicated in every country. We are seeing a resurgence of new cases notably the u. S. , policymakers who stand back and meanwhile, encouraging progress, the timing for the discovery of a vaccine or treatment remains uncertain so it this raises questions in my mind. 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 industry and wall street . Market industries have largely recovered losses despite highly uncertain economic environment outlook. Finally, other Silver Linings . What we see opportunities in the economy . Policy makers making priority, an opportunity to provide this global activity which has been threatened Major Economies in this Global Crisis . Online, we imagine what a post Global Pandemic can look like. The expert to make sense of this all and i look forward to the conversations which will be moderated by my colleague, a representation by this. Thank you. Thank you for this distinguished panel. I will share my screen really quick. Prospects in this, because of the focus on people, applications of the pandemic, such that a global infection, its affected work, the recession, economies are going to experience, it is this outlook, and the second is the patience of the pandemic. And then, following recession, care going to be lasting. In the context of the pandemic, we are expecting big potential outlook we can imagine. Finally, priorities and agenda and to discuss crisis if the urgent priorities but beyond the crisis, policy makers need to look forward at policy measures for a strong role. Im going to use this, this year end next year. By now, there is a plunge around the world. We are expecting Global Growth to be around minus 5. 2 this year. In the case of this economy, its going to be the largest. With Global Growth for an extended time, being able to expense the first recession they will see by about 2. 5 . If you look around the region, we see differences but a serious bounce is underway. Expecting policy merely because China Economy pushing this growth will. 5 . Other than that, all regions district contraction. It will see a contraction over the past 100 years. Around minus 7. 2 . Central asia, east. Regions and countries with exporters will see significant advance. All will see historical contraction and we will contract by about 2. 2 . Growth will come back but we are expected, this is a global recession. If we go back to 1870, we have reasonably good data, 14 global recessions, each global recession and Global Economy contracting. This will be the fourth global recession. The second world war. Recessions are important here, two of them associated with world wars. Logical future is Global Economy will see and experience a contraction. Slightly more than 90 is huge. This is higher than what we saw than the Great Depression. There are risks in these risks are still there. The single most important risk is a second wave of pandemic coming. If you look at this, as economies exit the united states, we will see infections falling significantly. The beginning of march. On the other hand, economies in the pandemic is in full force. Theoretically, market in south asia, you see a significant increase number of infections. The capacity and limit Testing Capacity so the pandemic in these regions. Beyond the short term, they have implications. There are large losses and these losses were to be recouped, next year it 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 recessions will have more and the Effect Commission and of course, productivity. In this pandemic, the Global Economy is going to be concentrated by the devastated shock. The pandemic, longterm Global Growth, since the Global Crisis, in 2010, the Global Economy, ten years ahead growing about 2. 3 . Declined in 2014, 2. 4 . The pandemic will have a long over global expectations. Physical and policy committees, and alarming response to the crisis. What goes sooner or later, there will be a deal. Much higher levels and much higher deficit. Its important governments, to basically try to redraw the stimulus and the time comes. To basically reach sustainable levels of debt. Its an important risk need to Pay Attention to. In this crisis, so far, the financials appears as recession but we shouldnt deceive ourselves and offer the Global Financial crisis, especially before the economy. Priorities are. In short term, help economy crisis. This requires systems, and anything corporate in the economy in an intelligent way. Policies globally is also difficult and in this context, we need to provide for those economies, they need this in desperate times they are facing. Its a crisis policymakers need to look forward and have sustainable longterm growth. A number of important pieces, a discussion about what this is, there are policy issues here. The context of the shortterm and there are policy priorities in the pandemic. In institutions, to attract the necessary activity. Policy and global challenges he, the necessary formation in these challenges emerge. Global trade and Financial Systems are experiencing tidbits and agreements to push forward and agreeable and systematic financial growth. I think the crisis could be a slow ability and in this context, its going to be important to address challenges associated with climate change. So like this, they are in a Global Financial crisis. A discussion about the shape, this shape is recovery. I think this is useful, thinking about Global Economy struggles, the nature of this, policy makers need to go out and get comprehensive responses. It is true how they are going to eventually. That is the subject. Thank you. Thank you. Im hoping everyone can see the whole panel at this time. Glad to moderate this panel. Im joined by my colleague between brookings and cornell which is why you have cornell on the background. The chair of Global Research jp morgan, one employer and we met at the beginning of our program, Vice President for Global Economics developments brookings, is going to join us as well given his interest. Youre interested in whether your view of Global Economy matches the one he just laid out and what you see in markets. You talk in your report, a powerful quote the second half of this year. But we know, markets, latin america from africa is different from china. How do you see the world and how do you see it differently and world bank . 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 . And i will go into the discussion. The first thing, this time around, the Global Financial crisis, weve had an immediate proactive response from all 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. Expanding by more than three times what we call 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 and basically close to zero and 70 of the market and thats the equity market is at the same time, market liquidity is poor here so you have to be careful you will have this. We estimate the liquidity is about 60 weaker than it was in the market and it was before. 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 and rely on a large supply in the third margin 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, you have it at 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. In respect to the level of 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. With income loss, i think its going to be very large longlasting damage but youve got another one or two months for the day that is coming out it is going to look quite good but this is going to be trickier in the Fourth Quarter because many of these supports will rules. We are left with a deficit estimating 13. 8 of gdp, the highest in 80 years. When looking at Public Sector debt from 15 to 20 Percentage Points higher. A third due to potential liability and we are looking at in the emerging markets, three different scenarios for emerging markets. The more countries are feeling better as output cap but if you look at latin america, we looking at 9 contraction for latin america. This is where the pandemic still has not peaked yet. We are seeing some of the biggest losses that will take place. Then you have african countries, some of the highly structured countries, all these official relief measures done by the g20 so its hard to characterize emerging markets as one block but china is very important here. China, we estimate every 1 decline in chinas growth is about. 4 of Global Growth. Thats why we look at the numbers in china with china. The export but we are looking at a decline for trade thats been going down consistently over the last couple of years and it will continue. Let me finish, u. S. China tension as well as the possibility of a second wave, i think what youre seeing now is a wave that there is still a second wave. Sometime before you have a vaccine ready, widespread use but the losses of the corporate level are going to be significant despite the market rebound weve seen in Financial Markets. We estimate it dropped by about 70 in the Second Quarter of the year, we are at 6 rate, the highest in ten years. Weve had 150 billion of debt downgraded from highgrade to highheeled, you still see this tremendous level of support coming from banks more broadly and you see it not just the central bank, 15 emerging markets are being pushed as well so we are in the Global Financial crisis, we exhausted a lot of that and its the last thing parts we need to monitor going forward. You said stock market has been strong despite the scary headlines about the economy in part because there are few alternatives for money and banks have made it attractive but if the market basically assumes there will be a second wave or a decline in global productivity, is the market fully factoring in some of the risks you elaborate . I think the market is going nowhere anytime soon but the Central Banks are in for the long haul. This has been a real paradigm shift. There are things, there will not be a lockdown like we saw in march april. If we have a second wave, we are seeing a second wave but not the wave of fatalities we saw a few months ago. 80 of the s p 500 stock has a higher shareholder yield than u. S. Treasury yield. If you get 70 of the deaths close to zero yield, there has been a search for yield in the market. Record issue of the u. S. Bond market, look at 1. 6 trillion this year because corporate are trying to get ahead of this. Trying to get the Balance Sheet get near zero so they do have a question to enjoy but its not recovery, we are seeing right now is necessary but in this condition recovery, its an incomplete recovery. Want to invite you to react to whatever you want but i have one question. What weve documented is an extraordinary response by policymakers and of course, theres one set of people economists, many of them will say thank god and this is why we are not looking at Great Depression 2. 0 but i hear a lot from people about like is this a perpetual motion machine . Okay long can we go on with trillions of dollars of debt . Line have the bonds the treasury issues, what are the risks to this sort of policy response and that bubble . Certainly listening to the support and listening, it helps. We should be humble enough to recognize the economists are terrible at forecasting recession but its easier to get carried along with economies like that and certainly all the indicators would suggest about worst yet, the Financial Market is simply doing okay. Its not related to fundamentals but a couple of promising things, two months ago, three months ago, the chinese economy would have a recovery and it does seem to be in motion, the Manufacturing Sector is doing well. It seems to be picking up, the economies are picking up again even though theres a lot we are concerned about especially the market economies and even in the u. S. , beginning to see some of the numbers beginning to come back up so perhaps, not our duty at this stage, its a lot harder to tell. It easy to tell because whats going on in the demand and supply components, the initial phase looks like this because of the lockdowns as well. Perhaps once we got past the lockdowns, the supplies would be better taken care of. On the demand side, macroeconomic policies both physical policies can. There have been huge amounts of stimulus that practically every major economy dont at this problem and its at least the worsening about its supported demand enough to provide a robust recovery, far from obvious but the bigger question is whether these policy tools, going about risk are the supply. I have support that i have significant concerns about productivity and coming into this recession, we already had very few productivity coming out of the last recession by the financial crisis of 2009. Private investment was given and in china which has had recent growth, which has come from the Public Sector rather than private investment. The other concern is even though the financial system, this is a very important distinction from previous sections, especially the system coming out of it, that has not quite system this time but especially for the very important growth and productivity growth in the economy and these are the small and Medium Enterprises and especially in economies like china and the Service Sector as well. How long this could be, i think there are significant worries on the supply aspect, the deflection that may be taking place to Global Supply chains both domestic and broader supply processes and these are life. It could potentially tell a positive story. Many countries are experiencing significant negative effects, one obvious answer might be on shoring. Another answer might be diversification of supply chains. Both of these ought to lead to more investment once things settle down because its going to lead to more investment. Perhaps we get list benefits of globalization and cost effectiveness of Global Supply chains but you could get it boosted. One other problem is confidence. Business and Consumer Confidence is shattered right now. Businesses already were not investing as much as they could even sitting on large amounts of cash because they do not feel the environment produces this. Very significant agreement with the largest economies in the world and between the u. S. And many other trading partners. Investment this week. One thing thats happening in 2008, 2009 financial crisis is standing together and say we will do things in the effects of the financial crisis. What remarkable is that this time weve had National Governments, Central Banks stepping up to the place, even more dramatically than they did during the crisis but at a time like this, the sense that there is a strategy at the global level is important and bring back Business Confidence and Consumer Confidence we havent seen that happen because of lack of leadership but also because the pandemic seems to have become an important pastime of national leaders, the problems they face at the national and Global Economy. Thats going to be an important thing. One of the difficult issues as we look at the shape of what is to be and whether its prolonged, the government in addition to these measures, they are taking interest in doing this, and provide a strategy in dealing with the Public Health dimension but also broader policy both domestically and globally, im not that helpful but i think this will change. How would you grade the performance of the military fund and world bank . Have they been aggressive enough . They certainly tried hard. The willingness of the world bank to use their resources to the extent possible to buffer, especially the weaker economies and coordinating debt relief has been a long the right lines. Certainly theres been some resistance by National Governments but for the small economies, but ultimately, the form of debt relief are going to be crucial. None of the standard mechanisms that came into play in previous crises in the market economies right now, you dont have china, positive growth this year. Commodities for this problem, for developing countries, even when their depreciating so practically every dimension in the economies are getting hammered. I think the world like a done lot more needs to be done because of the resources are limited and all they can do is provide National Governments and private market. One of the things the world bank and jp morgan reports underscore is that this crisis has not been as bad in africa as it has been in latin america. We used to be the chief economist with the World Bank Back at yale presentation on Economic Activity where she expressed some prize that covid hadnt been more devastating in lower Income Countries with not very robust Public Health systems. I do think they will believe the data on africa, africa has been relatively less harmed by this . Is is just a calm before the tsunami . Its a true the numbers were up compared to other regions but the reality is, it reflects the reality in africa has had the worst of it, measures have been taken and effective but i will question because it means youve been able to have widespread testing and the health capacities, confident to declare that. I hope that will be the case but for that to happen, we need to step up in testing. The economic front, i think in context, before this pandemic when africa was looking at a robust economy growth, its agreed to a growth average they have the Global Economy but they came and disrupted that. Economic numbers in the foreca forecast, not looking back but remember, its also the high. In terms of how covid is affecting the economies and its going to be the Economic Performance in 30 years. For them, it means quite a lot. But i alluded to earlier, its been on every dimension. About 55 in the first few months but it took several months to reach that level of decline. It makes up those economies. Its a short accident to which it will affect the economy. Fortunately, it is highly reliant so its very disruptive. Thats it, can affect so in many ways, its like many crisis in one. Its comforting to hear there is some recovery because in africas case, the Global Economy in that sector is really important. The reliance on that sector. The environment like china, we should seen that. The key issue is how we come out of it, being able to preserve some fundamentals. Their ability to work with resources respond to economic fallout of significant content. About 1 of gdp is responsible. Particularly the u. S. , we are seeing 10 in other Major Economies was somewhere around four or 5 . This country is unable to master the physical response necessary to get ahead of crisis. Efforts have been helpful but the gone a long way but not enough. Whats been missing is being able to think outside of the b box. Policies many other economies have done but policy responses have been incremented which is not really what this is. Will give you an example of a non orthodox Financial Institutions ought to be financing. It could begin by looking into the sgrs and many have suggested a billing dollars of sgr. In that case, i alluded to the majority and the political wind is not there. The g20 has twice but they could not get the Political Support for it. One of the things thats been noteworthy over the last several years is in part thanks to china but not exclusively, a steady decline in the number of people who follow the definition of poverty. We are seeing an increase in inequality within countries, like within the united states, is actually a decrease in Global Inequality in part because so many people at the bottom have been lifted out of poverty. It looks like this progress is being disrupted by the covid pandemic and the global recession you describe them curious whether you think first, how big a deal is this . Second, is this something we can recover from and in a couple of years, this will look like a hiccup . Versus longlasting to the progress . With the pandemic, its implied significantly. This issue of politics, talk about this global recession and the baseline, they are expecting 5 contraction. If any of these outcomes increase anywhere between 17 to 100 million, just look at the first time, you see an increase and of course, recession of the crisis we are seeing around the world, Global Economy is being able to have that over an extended period of time in the context of doubling up on objectives and i think we are going to lose a significant share of those. Beyond the shortterm, it will get long term consequences of the issue, how this pandemic will affect potential growth, if the abilities economy regrowth and mentioning the confidence issue, we have seen the type of answers, policy uncertainty of the global level, and investments in that impact will be there in the future. Then you have this millions of unemployed, Human Capital, in many countries around the world, schoolage children are having all kind of challenges, used to require your other goals are concerned depreciating schooling. Then of course, you have a series slowdown of contraction and investment for productivity. Why all of these are collectively important, you need to reduce poverty and have distribution. So the pandemic creates all types of challenges and i think in terms of this, the challenges we have prior to the pandemic will be exemplified because of this. You mentioned briefly globalization and im wondering when you think we will look back at this and say 2007 was the peak of the shortterm peak of globalization trade and direct investment and whether we will be on a study down term trade in gdp and stuff like that. We might have shortterm benefits because of increased investment but the risk is it will lead to lower productivity growth and deficiencies the bank speculates so im curious how you think about this, we will call you back in ten years and remind you what you said today. D globalization is a very serious longterm debt also is within some of the control of political factors so the u. S. Elections, the way u. S. China plays out, all the these factors are beginning. What we saw was trade intensity basically has the Global Financial crisis and then you see different sharks, you have the recession after the Global Financial crisis, the second was 2015, 2016 when you how to slowdown in emerging markets and oil prices, then in 2019, u. S. China trade attention and now you have basically the pandemic disruption. Its also something that happened very gradually and i would say if you look at the u. S. China tensions, one thing one has to know is you look at the American Chamber of commerce in European Chamber of commerce, survey and you look at the responses, 83 of u. S. Companies say they are not considering relocating their manufacturing outside of china. Only 11 in europe say that. You still see there are a lot of things easily when you look at china. All of these Companies Grow in china. Second, china is the only country if you look at the 666 manufacturing components manufacturing, all of them. They have a labor force with 1. 4 million of graduates in early no infrastructure and Government Support in these sectors so i dont think the supply chains are going to move back easily. I do think you see companies thinking about china and he will continue to see between u. S. And china, the trade war has always been more of a text force, lingering on which administration will real republican and democratic concern on some of the technology issues. I would say we see this as longerterm and one that has been in the pandemic as far as having the waves of shocks but i want to over exaggerate the you can change the model easily and i do think theres a lot of sessions that will take place after this crisis, what is the right kind of way to look at getting back to a normal structure or will it be something more popular . One thing to note is many of the populist leaders have the support during the pandemic. There are reasons to have optimism at this. We have about eight minutes left. I thought i might ask this briefly, its obvious the numbers of cases of covid which will be the most important factor, what one or two things you think will most determine whether we have a more robust recovery in the beginning of 2021 . What are the things that really matter . Before the House Committee of Small Businesses a few days ago, the state of Small Businesses and what happens to the devices, is going to be crucial for every economy, the funds that have suffered the most because theyve had traditionally the smallest but first, look at an economy like the u. S. , the next job creation was not that large but given the job losses, that sector comes back relatively quickly, its going to be difficult. If you look at china, the productivity build and having Financial Systems not being under stress is a good thing but its going to have to be awake with policy support to make sure these are taken care of because if not, its going to be difficult to come by and especially in terms of consumption. Seeing the uncertainty they have alluded to, spike and Savings Rates in largely because of most countries raising these savings. Many people hurting and those people hurting are tied to those. Thats the key to economic survival. I would agree with that but this crisis is the Health Crisis and secondarily, economic crisis so to me, the rebound begins with an parity on the timing of a vaccine. We do not have that situation would be unattainable no matter how much we give to the economies. Okay. Joyce. I agree with all points that have been made but we are looking at the u. S. In particular, labor income. Are you going to be able to create jobs . The unemployment numbers better than some people thought but its a low of unemployment. If you look at the passages, we estimate its contracted by a third but the stimulus packages have been 20 Percentage Points. With jobs return . Its very much in line with what you said, small and medium size businesses be able to eventually be higher and what happens when the stimulus rolls off . I agree that we have to go back to what is the duration because we are seeing right now its very deep but very shortlived. Widespread usage amongst the population and i would mention commodity prices. They are incredibly important and particularly for latin america. I think thats one of the hardest hit regions, its going to be very important but we have heard about this for africa as well, we still have prices being a big merger. Increasing the chances of unemployment recovery . Its very strong and sustainable. Along with the sharp increase in confidence. I agree with what the other panelist said, we need to seek comfort is coming back. We also need to see the Financial Market, we will not have a Financial Market. These two go hand in hand and how policy makers are going to carry on. This goes back to the question he asked at the beginning, sooner or later, Financial Markets and how we are going to go forward with this large scale support. I think continuing on these issues can trigger Financial Stress as well. We need to Pay Attention to the confidence and indicators. I think we are out of time. Want to thank you for comprehensive report and i recommend if people only look through your slides, theres a lot more in the details of the report which is the world bank website. I do think he enjoyed the bringing of the perspective of jp morgan which is such useful research and updates during crisis. Each one excels in answering almost any question and complete paragraphs, which i am always abuse. Want to congratulate you on public Economic Development and we hope you wont stop thinking about policies toward africa which is a growing population Growth Potential is being threatened now. I want to thank you all and thank everybody who listened and if you enjoyed it so much want to watch again, the video will be on the website. Starting at 8 00 p. M. Eastern astrophysicist looks that the scientific discoveries of galileo the challenge conventional thinking during his time. Then evolutionary biologist neil shubin looks at evolution using dna from prehistoric fossils. Later, nasa astronaut and scientist kate greene recalls her experience living in a simulated martian environment. Enjoy book tv on cspan2. Cspan has unfiltered coverage of congress, the white house, the sipping courts and Public Policy events. 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