Where you are. Thank you for joining us for this Virtual Event on the po postcovid global outlook. Im a senior fellow and vicepresident of the economy and Development Program at brookings. The Global Economy is sharp, unprecedented in its depth. And the pandemic and responses have brought countries and economies to a standstill disrupting billions of lives and jeopardizing decades of development progress. The june edition of the World Bank Global economic prospects which motivates todays conversations envisions a 5 1 4 contraction of global gdp in 2020. This is the deepest global recession since world war ii and the largest collapse in per capita income since 1870. Its a timely report thats informed by assessment of the fundamental drivers of longterm growth, including the collapsing investments which will slow capital formations and in Human Capital and the location of trade and supply linkages among others. The pandemic is having a proportionate effect on lower Income Countries where the Commodity Prices and where economies are dominated by the Informal Sector with the ability to adjust to covid related measures. Similarly, the most vulnerable populations in the economies are relatively more exposed. And as such, the pandemic is likely to leave a legacy of even wider inequality between and within countries, and with the responses to dimension. It was depressing to see the impact of covid on inequality. As disruptive as its been to the lives and economies around the world. There is unfortunately, still great uncertainty as to whether we have seen the worst case scenario. Notably, the epicenter of the pandemic appeared to have rotated to the global staff with the ability to combat the virus is more limited and where responses to the economies are constrained by elevated debt levels in several countries and by the inability of countries the lack of sufficient global coordination to fight the pandemic means its as strong as its weakest link and the virus remains a threat to the Global Economy unless it is eradicated in every country. We are also seeing a resurgence of new cases in some advanced countries, notably the united states, causing policy makers to dial back to the opening plans. Meanwhile, despite encouraging progress, the timing for the discovery of a vaccine or treatment remains uncertain. To the complexity of the current environment raises several questions in my mind. How sensitive is the Economic Outlook particularly to rebound for next year with assumptions about timing for reliable vaccine or treatment. What will be the longlasting effect of the pandemic on the drivers of fundamentals of growth, Human Capital. And the sectors that are hit hard, like tourism, the global value chain. What do we make of the connect between main street and wall street, where stock Market Indices have largely recovered much of their losses despite a highly uncertainty economic environment and outlook. Finally, are there any Silver Linings . Where do we see opportunities to build back better and stronger economies . And how should policies while seizing the opportunity to provide the sluggish Global Economy, and since the Global Financial crisis. These are questions on our minds at brookings, what a postcovid economy could look like. Were happy to have a Diverse Panel of experts to help make sense of this all and i look forward to the conversations, which will be moderated by my colleague david, and by our world bank colleague and brookings affiliate. Thank you and over to you. Thank you for organizing this to be a part of this distinguished panel. Let me share my screen quickly and then provide remarks. So prospects in early june. Because of the time constraints i am just going to focus on three points. The first point about the shortterm implications of the pandemic. This is going to be deepest and most extension since the second world war. The economy it will [inaudible] it is a somber outlook and risks are still to the downside. The second point is about the longterm implications of the pandemic and there as we have seen before following deep recession, there are going to be lasting scars. In the context. Pandemic, we are expecting weaker potential output, weaker investment and weaker productivity on the longterm. And finally, policy priorities are on the agenda as you discuss and addressing the immediate crisis the is priority, but beyond the crisis, policy makers need to look forward in other big policy measures to lay the foundation for strong and sustained growth. Throughout the presentation im going to use the acronym emde. How does it look like this year and next year . By now, its clear that were expecting Global Growth minus 2 5. 2 the economy are nearly the engines of Global Growth for an extended period of time. As the growth experience the first recession and they will see their output to contract by about 2. 5 . If you look around the regions, youll see differences, but pretty much a serious downturn is underway. In the face of asia pacific theyre expecting positive growth primarily because china with growth this year and it will be the only asian economy for positive growth by meager 1 . It will push east asia growth to around. 5 . Other than that, all regions will have historic contraction. And take the caribbean. It will see a contraction because it will see over the past 100 years. Growth will be around minus 10. 2 . Sub saharan africa, middle east, north africa, regions in countries with commodity exporters will see significant decline in their growth rates. Even in south asia, a region that has no will see historical contraction as india will contract by 3. 2 . Next year growth will come back, but theyre expecting the a modest recovery. Few downturnturns that we had this year. This is a true historical global recession. If we go back all the way to 1870, which we have reasonably good data, there have been 14 global recessions. Each global recession you saw Global Economy contracting. This will be the fourth deepest global recession, deepest one since the second world war. The other three global recessions are important to understand here. Two of them, theyre associated with so if you take out those two, this global recession will be the deepest since 1870 after the great depression. And the future is that global is the highest economy per capita also, slightly more than 90 this year. This is higher even than what we saw at the height of great depression. There are risks down the road and these risks still to the down side. The single most important risk is a second wave of pandemic coming. Now, if you look at where we a are economies exempt the united states, if you take out the united states, you will see the number of daily infections down significantly since the beginning of march. On the other hand, emerging markets and developing economies, the pandemic is in full force. In latin america, caribbean, sub saharan africa, south asia you see a significant increase in the number of infections. These are the regions with limited Health Service capacities and limited testing capacity. So we have a limited understanding of the gravity of the pandemic in these regions. Now, beyond the shortterm, this pandemic will have longterm implications. There is no question there are large losses in and these are not going to be recouped next year and then the growth comes back. In fact, if it happens during the 2009 global recession, we are not going to go back to pandemic output any time soon. These types of recession will have longlasting scars as they did in the past and negative effect, physical human, and of course productivity. Now, another important consequence of this pandemic is how the Global Economy to basically generate growth. Its going to be con trained by the devastating shock we are going through. Prior to the pandemic Global Growth longterm since the Global Financial crisis. In 2010 forecasters with the Global Economy 10 years ahead would generate growth about 3. 3 . That number declined below 3 in 2014 and now its around 2. 4 . In all likelihood, the pandemic will have a long shadow over Global Growth expectation. Now, the providing overwhelming response to the crisis, this response was necessary, but of course, sooner or later there will be a deal. That deal will be much formal higher debt level and its important for the government to basically try to control this when the time comes and policy frameworks to basically reach sustainable levels of debt. This is another important risk we need to Pay Attention to. In the crisis in this crisis so far has not translated into the type of systemic Financial Stress we saw in previous episodes of deep recession, but we shouldnt deceive ourselves as we saw after the Global Financial crisis, there might be repercussions associated with the Balance Sheet, especially of those economies in them. Policy priorities are clear. In short run, dealing with the health and economy crisis is key. It will require supporting health care systems, helping vulnerable groups and aiding corporates. The idea was to keep the economy afloat and supporting the activities in an intelligent way. With the policies globally, its also typical and in this context, we need to provide it to those economies, the poorest emerging markets with the economies, they need this in desperate times theyre facing now. As the crisis abates, policy makers need to look forward and put in place policies for sustained longterm growth and there are a number of important items. Theres always a discussion about what is urgent, what is important . That urgent policy issues here in the context of the shortterm, and there are critically important policy priorities that we think about the aftermath of the pandemic. And there with the institution, you youre to support activity, really important. Coordinating policies globally to address global challenges is key, including those to the test the Global Public health and providing the necessary information when these types of challenges emerge. Global trade and Financial System are also experiencing multilateral agreement to push forward and agreeable and basically trading system and Financial System. The types of risks we think, big or small probability of emerging and when testing themselves can add to in this context, its going to be important to address the challenges associated with climate change. So like we saw during the Global Financial crisis, there was a discussion about the shape of the recovery. Many shapes are being proposed. The bshaped, wshaped, ushaped, the vshape shaped recovery. This is to simplify the theory. They are thinking about as Global Economy struggles with the pandemic. Make no mistake about the nature of the recovery. Whatever the shape, its going to be a painful one and policy makers need to provide and it is comprehensive bold responses and how theyre going to be there eventually. With that, thank you. Thank you. Im hoping everybody can see the whole panel at this time. Im david wessel director of the hutchens center at brookings. Im joined by my colleague who spends time between brookings and cornell, which is why you have cornell in the background if case youre wondering and the chair of Global Research at j. P. Morgan which you can tell from her backdrop she only has one employer and, who you met at the beginning of our program, who is the new vicepresident for Global Economics and development at brookings is going to join us as well, particularly given his interest in africa. Id like to start with joyce. Joyce, im interested in whether your view of the World Economy matches the one that ian just laid out and particularly in emerging markets, you talked in your recent report about a growth rebound, a powerful growth bounce in the second half of this year in emerging markets. What we know and the presentation made clear, a very diverse set of markets, latin america is different from africa, which is different from china. So how do you see the world and particularly how do you see it differently than the world bank . Thank you so much, david, for those questions and thank you so much for the Brookings Institution for the invitation and for an excellent report. Let me start with the first question. Why is there such a disconnect between main street and wall street and then ill go into the emerging markets discussion. The first thing i would say is just that this time around, with the Global Financial crisis, you had an immediate proactive response from all of the Central Banks. Developed country and emerging markets, Central Banks and if you look at the size of the expansion of the Balance Sheet, we estimate that it is about 20 of gdp. Now, if you compare that to what happened during the Global Crisis its 6 of gdp. So youve expanded by more than three times what we saw on the Global Financial crisis. At the same time, if you look at how low Interest Rates are right now, we estimate that nearly 70 of global Government Debt has a yield of 50 basis points or less. So youve got, negative yielding debt, but then you have basically close to zero yielding debt for 70 of the market and that pushed money into the equity market and at the same time your market liquidity though is really core here so youve got to be careful that youre going to have this return in volatility. I mean, we estimate that the liquidity is about 60 weaker than it was in the market depth what it was prepandemic. So thats the first thing id say about the disconnect between main street and wall street. Youve seen the fed Balance Sheet that expanded by 3 trillion. You see that theyre on a buying spree of Epic Proportions here. But let me just turn to the Growth Outlook and forecast and we agree very much that this is the largest decline in 70 years, the Third Largest in 120 years and we have the advanced economies contracting by 4 and in emerging markets, if you take out china because we have china growing, one of the few countries growing positively at 2 . Youve got a contraction in the order of 6 or more in the emerging Market Countries. So i would say that, yes, we do see a rebound because the first half of the year we had about a 16 annualized drop in gdp. So when you turn everything off, youre going to get a rebound, but this is the easy part of the recovery, and i would say its incomplete recovery with respect to the level of gdp. Its the level of gdp at the end of the year, we still think we will be 4 Percentage Points below where it was prepandemic. We so 20 of gdp up for the second half of the year, but you look at the level of gdp still 4 where we were prepandemic and its the income loss, the product loss, productivity losses that i think are going to be very large, longlasting damage. So youve got another one or two months when i think the data prints coming out are going to look quite good, but this is going to be trickier in the Fourth Quarter of the year because many of these income supports will begin to roll off. And what are we left with . Were left with a fiscal deficit 13. 8 of gdp, the highest in 80 years. Looking at Public Sector debt burdens 15 to 20 Percentage Points higher, and break that down a third due to lower growth and a third due to liabilities. Were looking at emerging markets and really three different scenarios for emerging markets. China has been doing better, its near full recovery right now and thats been a surprise taiwan and korea are better. And they have the smallest output gaps. But if you take a look at latin america, were looking at 9 contraction for latin america where the pandemic still has not peaked yet and looking at where well see some of the big losses take place and sub saharan african countries, with the relief measures in discussion by official creditors and by the g20. So its very 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 off of Global Growth so the outlook for china skews the numbers which is why we look at the numbers exchina and with china. And chinas recovery has been surprising, but were looking for a decline for trade thats been going down consistently over the last couple of years thats going to continue and let me finish with a comment on the key risk ahead. We didnt look at the u. S. Elections, the u. S. China tensions, brexit ahead as well as the possibility of the second wave. I think what youre seeing now is actually a very stubborn first wave that there still is fears of a second wave and before youll have a vaccine ready for widespread use, but the losses at the corporate levels are going to be significant despite the market rebound that weve seen in Financial Markets, we estimate that the corporate profits drop in the Second Quarter of the year, were at a 6 default rate. The second highest in years. 150 billion in debt downgraded from high grade to high yield, its a joke, but youve seen this tremendous level of support thats been coming from the Central Banks more broadly which supported the markets. 15 emerging markets and Central Banks are now purchasing assets as well. So whereas in the Global Financial crisis it was about the policy easing weve exhausted a lot of that. Weve gone to credit using, and thats kind of the lasting consequences that we need to monitor going forward. Let me just push a little bit on the market thing. So, youve said that the stock market has been strong despite the rather scary headlines about the economy. In part because there are few alternatives for money and the Central Banks have made it attractive. But if the market basically assuming there wont be a second wave or a decline in lasting decline in globalization or longlasting decline in productivity. If is the market fully factored in for some of the risk that you elaborate . I think that the market is factoring in that the fed is requesting nowhere soon that the Central Banks are in for a long haul and its been a paradigm shift and assuming there wont be a lockdown like in march and april, even if you have a second wave, its not going to be met with that type of lockdown, but were not seeing as big of a wave of fatalities as a few months ago. I think the market is looking for a search for yield. 80 of the s p 500 stocks, if youve got 70 of the debt close to zero yield or subzero, theres been a search for yield in the equity market and record issuance out of the u. S. High grade Corporate Bond market we think 1. 6 trillion this year it will hit because corporate is trying to get ahead of this and the fortress battle and raise money when they can at near zero so they have a cushion if this continues to endure. Its not a vshaped recovery, its a partial v. What were seeing now is a necessary, but insufficient condition for a recovery, its an incomplete recovery. Im going to invite you to react to what you want, but one question, what joyce and ian have documented is just an extraordinary response by policy makers, fiscal and monetary. Of course, theres one set of people, economists, many of them we know who say, thank god and this is the reason were not looking at great depression, 2. 0, but i hear a lot from lay people about like if this seems like kind of perpetual motion machine. How long can we go on with government issuing trillions of dollars of debt. Its a great deal to be concerned about. Perhaps we should also be recognize the economy is terrible, forecasting turning point a recession that is a lot easier to get carried along with whatever the economy, certainly all the indicators that one looks at right now, would suggest theres a lot worse to come yet. The Financial Market seen to be doing okay and joyce is given as some reasons why that might be so, thats what that related o fundamentals. But there are a couple of promising things that i was keeping in mind. Who would have thought just two months ago, three months ago that the chinese economy would be where it is today where as joyce pointed out a a recovery. That seemed to be in motion, the Manufacturing Sector is doing all right. Even the Services Sector seems to be picking up. The capital is picking up once again even though theres a lot to be concerned about especially among the weaker in merging market economies and even in the u. S. With her beginning to see some of the purchasing index numbers beginning to come back up. So perhaps its not all gloomy at this stage. The doom story is a lot harder to tell. Its easy to tell partly because if we separate out whats going on in the demand and supply components, the initial phase did look like a massive there was supply because the lockdowns as well. But there was a perception perhaps once we got past the lockdowns the supply would be better taken care of. And on the demand side certainly macroeconomic policies both the school and monetary policies can come to some of the downturn. There have been huge amounts of stimulus that practically every major economy has thrown at this problem. Its at least forestalled the worsening of demand although whether its supported demand enough to provide a robust recovery is far from obvious yet. The bigger question in my mind is whether these policy tools, going back to question about the risk calculus, i really could help in terms of supply. The report points out their concerns about productivity and, in fact, come into this recession we already had very slow productivity growth come out of the last recession that was funded by the Global Financial crisis of 20082009. Private investment across the world was quite weak. Even in china which has a decent investment growth come much of that has come from investment by the Public Sector, by the Stateowned Enterprises rather than private sector investment. The other concern is that even though the Financial System doesnt seem to be in distress and again i pointed out this is very important distinction from some previous recessions come when the Financial Systems especially the Banking System came under enormous stress, thats not quite happened this time. But financing conditions are still very tightly, especially for the firms that are very important in terms of employment growth and productivity growth and practical every economy and these of the small and beaded enterprises and especially in economies like china in the Service Sector as well. If one looks at the longerterm prospects, how long this downturn could be, there are some very significant worries on the supply aspect. Again, joyce and i both referred to the destructions that may be taking place the Global Supply chains, both domestic as well as broader supply prostheses, and these may be with us for a while. While. Here again one could potentially tell a positive story. Many firms, many countries that are experiencing significant negative effects on the supply chain disruptions, so one obvious answer might be on shoring. Another obvious answer might be diversification of supply chains. Both of these ought to lead to more investment once things settle down. When youre trying to that leeches more investment. Perhaps we will get less of the benefits of globalization and the costeffectiveness of Global Supply chains but you could get a shortterm boost in investment. Therein lies one of the problem that i put in my remarks with, which is confidence. Business and Consumer Confidence is shouted right now. Businesses already were not investing as much as they could even firms that have large amounts of cash simply because they did not feel the environment was conducive. Coming into the covid pandemic. Tension between the two largest economy in the world and trade tension between u. S. And many of its other Major Trading partners. So investment is already weak. Business confidence was weak. One thing that happened in 20082009 financial crisis was the g20 did stand together and say we will do things to try and control the negative effects of this financial crisis. What is remarkable is this time we have had National Governments, Central Banks stepping up to the plate as joyce pointed out, even more dramatically than they did during the crisis. But i think at a time like this the sense that there is a concerted strategy both of the domestic level and at the global levels is really important in bringing back business confidence, Consumer Confidence. We havent quite seen that happen partly because of lack of u. S. Leadership but also because the pandemic seems to have become an important pastime of National Leaders rather than getting to grips with the problems that we face at the national and global economies. That is going to be an important thing to fix. To my mind one of the Critical Issues as a look at what the shape of the recovery is going to be and whether, in fact, this downturn gets to be more prolonged. Its really whether governments in addition to these measures are taken with monetary and fiscal stimulus really provide some sort of concerted strategy for dinghy with the Public Health dimension but also the policy incarnation with his policies both domestically and globally. I am not that helpful but i hope things will change. Let me ask you, ayhan. How would you grade the performance of the International Monetary fund and the world bank . Have been aggressive in a . They certainly try to pick the winners of the imf and the world bank to use the resources to the extent possible to buffer especially the much weaker economies and to try and coordinate debt relief has been pretty much along the right lines. Certainly theres been some resistance by National Governments but for the small economies, some moratoriums on debt payments but ultimately in the form of debt relief or debt writeoffs are going to be crucial. None of the standard mechanisms they that came into play in previous ics are working well for the emerging market economies and developing economies right now. You dont have china even though theres some mild positive growth this year, pulling the world commodity out of this problem. For developing countries to rely on export revenues, even when their currencies are depreciating theres virtually no external demand. Practically every dimension the smaller developing countries and the poorer ones are getting hammered. Imf and world bank have done the right things but a lot more needs to be done because after all, the resources of these institutions are limited and all they can do is provide efforts for National Governments and ultimately for the private markets. One of the things that both the world bank in the j. P. Morgan report underscore is that this crisis has not been as bad in africa as its been in latin america. Penny goldenberg used to be the chief economist of the world bank now back at yale did a presentation of the brookings paper on Economic Activity or she expressed some surprise that covid had not been more devastating in the very low Income Countries with not very robust Public Health systems. I wonder if weather you think that she would believe the date on africa . That africa has been relatively less harmed by this . And is this just a calm before the tsunami hits . Yeah, so it is true that the numbers for africa have been relatively low when you compare it to other regions but the reality is they are still going up daily. We are seeing those tieins with slowing down. To the extent it reflects the reality on the ground in africa has spared the worst of it, it is very much welcome and may suggest some of the policy measures have been taken, have been effective. But i would caution because detecting cases means you also have been able to do a widespread testing, and the Health Capacities really such that we can be confident that insufficient amount of testing to declare that africa would be spared. But we sort help that would be the case. For that to happen we need to step up in terms of randomized testing, to be able to know for sure. In terms of the economic front, just to put in context, before the pandemic when africa was looking at a very robust economic growth, it agreed to have 5 growth on average, and that wouldve been home to seven of the ten Fastest Growing economies in 2025. This covid moment came in disruptive that drastically. On the economic numbers in a forecast including the ones in the World Bank Report, relatively speaking, its not looking back but you have to remember we need to normalize this and look at a per capita in income terms and you would see it a little bit narrowing of the gap in terms of how covid is affecting the economys and is going to be the Economic Performance in 30 years. So for them this means quite a lot. As was alluded to earlier by eswar, durbin hits on every dimension, Commodity Prices, oil price thank by about 55 in the first three months, but in the 2014th shocked it took several months for it to reach that level of decline. That is a blow. It makes up a big chunk of the economys. They will suffer from it. If you look at for example, about 85 billion in 2018 come just compare that to around 50 billion. It will show you the extent to which they can really affect the economy. But importantly this is highly reliant on the so than confinement there has really meant its a very disruptive economic activities. Thats also going to have its own economic effect. In many ways its like having many crisis in one for the african economies. But its more comforting to hear theres some recovery in terms of in africas case the performance of the Global Economy in the economic sector will be really important. As you remember africa is one of the regions where the economic crisis proceeded the Health Crisis only because of the reliant on the economic sector. Similar to what we see signs of recovery in some external environment, particularly tidy, we should begin to also see some positive spillover performance. But the key issue is how to come out of it while being able to preserve some fundamentals. And the ability to mobilize resources to respond to the health and economic fallout has been a significant constraint. Accordingly, youre only seeing about 1 of gdp in terms of physical response for the advanced economy take over the years weve seen over 10 . In other Major Economies we saw somewhere around 5 . Africas case, framemaker, ony 1 because these countries are unable to muster the kind of fiscal response necessary to get ahead of this crisis. This is where the world bank and other International Institutions effort seven really helpful but as is pointed out by eswar that gone a long way but not enough. What has been missing is being able to think outside of the box and to adopt an unorthodox policy that many of the economic advance policies have done. But so far they been incremental and a bit constrained by orthodoxy which is that with his moment demands. Interesting. Give me an example of some nonorthodox thing that you think the International Financial institutions ought to be financing from low Income Countries. For the low income country, they could begin by looking into the sdr is. Many have suggested really 500 billion one children, yes. But in that case as was alluded to it requires super majority in order for imf to pass that. Super majority is out there and the g20 has tried but the just cannot get that Political Support for it. Ayhan, one of the things have been noteworthy over the last several years is in part thanks to china but not exclusively, steady decline in the number of people who fall below the World Bank Definition of poverty. While theres been an increase in inequality within countries like within the united states, is actually in a decrease in Global Inequality in part because of my people at the bottom have been lifted out of poverty. It looks like this progress is being disrupted by the color pandemic and the global recession that you describe so graphically. Im curious whether you think, first, how big a deal is this . Secondly, is this something we can recover from in a couple of years this will look like a hiccup or is this a longlasting setback for that progress . David, condition for the pandemic for the [inaudible] it requires significantly. Let me start with this issue of politics. I talked about this global recession and that global recession of the baseline they are expecting 5 contraction. It could be 4 , you know. Depending on these outcomes, the number of poor will decrease anywhere between 70100 million. Just look at the first time after a number of years we see an increase in the number of poor globally. Of course with a steep recession and the Health Crisis were seeing around the world, there are these gains, Global Economy is being able to over an extended period of time in the context of double up on object is to i think were going to lose a significant share of those gains. So there is shortterm damage. Beyond that shortterm damage, when you look at the longterm consequences, how this pandemic will affect potential growth is the building of these economies to generate growth. And there we are really concerned. Eswar mentioned the confidence issue. Weve seen the type of answers, policy uncertainty weve never seen before at the global level. That has a great impact on investments, and the impact will be there for the foreseeable future. And then you have this millions of unemployed. Unemployment comes always with original Human Capital. In many countries around the world, School Aged Children have the all types of challenges, require the type of education they use to require under normal circumstances. This erosion of Human Capital is associate with this constrained schooling environment. And then of course you have a serious slowdown or contraction in investment. Why all of these collectively important you need to have growth to reduce poverty entity to have growth to have a larger pie and to have income distribution. So the pandemic creates all types of challenges, and i think im afraid interims of the challenges we have prior to the pandemic will be exemplified because of this. Joyce, you mentioned briefly used the phrase de globalization. Im wondering what you think to look back at this. Back and say 2007 was the peak of the shortterm peak of globalization trade, Foreign Investment and whether will be up on a steady downturn, trade and stuff like that. Eswar raced raise the possibils might have some shortterm benefits because of increased investment but the risk of course is that it will lead to lower productivity growth and efficiency that the World Bank Report speculate on just curious how you think about this, recognizing we wont call you back in ten years and remind you what you said today. Well, deglobalization is a very serious longterm threat but also is within some of the control of the political actors. So the u. S. Elections, way u. S. China tensions play out drags all of these factors are big influence about what really saw was the trade intensity, basically stalled after the Global Financial crisis. Then you really have seen four weights of i would call different shocks. Yet the recession after the Global Financial crisis was the first shock. The second was 20152016 and you had the slowdown in emerging markets, the flattening and Oil President prices in 2019. The u. S. China trade tension, now you have basically the pandemic and all by destructive it is something also happens very gradually. I would say if you look at the u. S. China tensions, one thing when asked to note is if you look at the American Chamber of commerce and the European Chamber of commerce surveys and you look at the business responses, 83 of u. S. Companies say they are not considering relocating their manufacture outside of china. Only 11 in europe say theyre considering this. You still see there are a lot of things you cant see that easily when you look at china. First of all all of these Companies Still want access to chinas market. Secondly, china is still the only country that you look at the 666 manufacturing components, you can actually manufacture all of them and they have a Skilled Labor force with 1. 4 million of stem graduates. They have the infrastructure and they dont have, support and some of the sectors i dont think the supply chains are going to move that easily. I do think you are seeing more companies thinking about china plus one and you still contingency between the u. S. And china what was a trade war has really been always in my opinion more of a test war were for the issues are going to continue to linger on irrespective of which administration it is. Theres real republican and democratic concern on some of the technology issues. I would say we do see this as a longerterm threat and one that had started well before this pandemic as far as having different ways of shock that its working to but i wouldnt over exaggerate that you can change them all that easily. I still do think that a lot of discussion that will take place after this crisis on just what is the right kind of way to getting back to a more multilateral structure or will stay something that is more of a populist realm . One thing to note is many of the populist leaders have lost support during this pandemic. They have not gained so poor. There are reasons of optimism as we look ahead. So we have about eight minutes left and i thought i might ask a question and each of you can answer briefly. Basically it is, the aunt of the obvious the number of cases of covid, which will be the most important factor, what is one or two things you think the most determined whether we have a more robust recovery in the beginning of 2021 . What are the things that really matter . Eswar, what do you think would be the most important . I just testified before the House Committee on Small Businesses supply chain a few days ago and started getting much more attuned to the state of small business. What happened to small and Medium Enterprises as i alluded to earlier will be crucial for every economy. The firms that i suffered the most because they have had traditionally the smallest cash buffers and if you look at an economy like the u. S. , the next job creation by these firms is not that large, but right now given that theyve taken on the brunt of the job losses, that sector comes back of relativity will be quickly to sustain employment growth and a robust weight in the u. S. If you look at china, most of the emerging market economies, small and Medium Enterprises are absolutely crucial to both employment and productivity growth. Having Financial Systems not be under stress is a good thing, but it is great to have to be away partly with support to make sure that these firms are taken care of. Because if not economic survival would be very difficult to come by especially in terms of consumption. We had seen the uncertainty they have a year or two spike in household saving rates. Thats largely because of better off in most countries, but there are still many people hurting of those people that are hurting are usually tied to the smaller enterprises. That i think is really the key to economic survival. I think i would agree with what eswar said but what i would point out in particular is this crisis i view it first and foremost a Health Crisis and then secondarily an economic crisis. So to me the certainty around the rebound begins with clarity on the timing of a vaccine or treatment. If we do not have that and then this is prolonged, i think the situation will be untenable no matter how much stimulus we pump into the economys. Okay. Joyce . Whether you agree both with all the points that have been made, but i would say a key thing were looking at in the u. S. In particular is labor income. You have the easy part of the recovery. You turn everything off and did you turn it back on but the real question is are you going to be able to create jobs . The unappointed numbers were not as bad as some people thought but we went into this with a 50 year low on unemployment. If you look at the passages, private labor income we estimate has contracted by a third basically the stimulus packages have paid off like 12 . Those stimulus is world off. Will those jobs return . It in line with what eswar said. With these small and mediumsize businesses be able to rehire him what happens when all the stimulus rolls off . I would totally agree that we have to go back to the sides of the spirit what is the duration of this recession . We are assuming its very deep but its also shortlived. Will it be a vaccination that is actually suitable for widespread usage amongst the population . The third thing i would mention is Commodity Prices. Commodity prices are incredibly important for emerging Market Countries and particularly for latin america. I think given thats one of the hardest hit regions, thats going to be very important that there are ties to the china cyclical but we have heard about this for africas will. The Commodity Prices are a bigger driver for emerging markets. Thanks. Ayhan, what would be at the top of your list that would increase the chances of less unemployment recovery . The recovery and be strong and sustainable only if it is basically coming along with sharp increase in confidence. I agree with what other panelists said. We need to see confidence coming back and we really need to see that Financial Market participants think that we will not have a Financial Stress event down the road. These go hand in hand, and how policymakers are going to carry on. This goes back to the question you asked at the beginning, soon or later some Financial Market participants might ask how were going to basically go forward with this large scale policy support measures. That type of question can generate all types of confidence issues and can trigger Financial Stress episodes as well. So we need to Pay Attention to basically the confidence as the single most important indicator as we move forward. Great. I think were out of time. I want to thank ayhan for a very comprehensive report and i recommend that if people only look at your slides, they got a good taste but theres a lot more in the details of the report which is of course on the world banks website. I want to thank joyce for bringing us the perspective of j. P. Morgan which is put out really extraordinarily useful research and updates during this crisis when were flooded with stuff. I always read the j. P. Morgan stuff. And eswar who excels in answer to almost any question thoughtfully and complete paragraphs, for which im always envious. And we want to congratulate you on your new post and put in a leadership you will provide a Global Economic development but we hope you wont stop thinking about policies towards africa which you point out is a place with a growing population and had so much potential that now seems thread. So with that of what you think you all and think everybody who listened. If you enjoyed it so much what to watch again presume the video will be on our website and you can enjoy it and share it with all your friends i hope you will. So with that thank you all and be safe. Thank you, david. They could, joyce. Thank you. Coming up the house education subcommittee holds a hearing look at the effect of the coronavirus pandemic on higher education. Thats coming up light at noon eastern here on cspan2. Later President Trump and First Lady Melania Trump discussed the reopening of schools in the midst of the pandemic. Live coverage of the white house starts at 3 p. M. Eastern on planet cspan. Org or you can listen with the free cspan radio app. Tonight a special edition of tv airing weeknights this week. Enjoy booktv on cspan2. Bench watch booktv this summer. Saturday evening at 8 p. M. Eastern settle in and watch several hours of your favorite authors. Saturday were featuring commentator, author and founder of National Review william f. Buckley, author of over 50 books including up from liberalism, flying high and the rake and i do, i watch saturday, july 18 as a future malcolm gladwell, bench watch booktv all summer on cspan2. I said hearing