Publication: Global Economic Prospects, June 2020
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2020-06-08
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2020-06-08
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The COVID-19 pandemic has, with alarming speed, dealt a heavy blow to an already-weak global economy, which is expected to slide into its deepest recession since the second world war, despite unprecedented policy support. The global recession would be deeper if countries take longer to bring the pandemic under control, if financial stress triggers defaults, or if there are protracted effects on households and firms. Economic disruptions are likely to be more severe and protracted in emerging market and developing economies with larger domestic outbreaks and weaker medical care systems; greater exposure to international spillovers through trade, tourism, and commodity and financial markets; weaker macroeconomic frameworks; and more pervasive informality and poverty. Beyond the current steep economic contraction, the pandemic is likely to leave lasting scars on the global economy by undermining consumer and investor confidence, human capital, and global value chains. Being mostly a reflection of the recent plunge in global energy demand, low oil prices are unlikely to provide much of a boost to global growth in the near term. While policymakers’ immediate priorities are to address the health crisis and moderate the short-term economic losses, the likely long-term consequences of the pandemic highlight the need to forcefully undertake comprehensive reform programs to improve the fundamental drivers of economic growth, once the crisis abates.
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“World Bank. 2020. Global Economic Prospects, June 2020. © World Bank. http://hdl.handle.net/10986/33748 License: CC BY 3.0 IGO.”
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Publication Global Economic Prospects, January 2022(Washington, DC: World Bank, 2022-01-11)The global recovery is set to decelerate amid diminished policy support, continued COVID-19 flare-ups, and lingering supply bottlenecks. In contrast to that in advanced economies, output in emerging market and developing economies will remain markedly below pre-pandemic trends over the forecast horizon. The outlook is clouded by various downside risks, including new COVID-19 outbreaks, the possibility of de-anchored inflation expectations, and financial stress in a context of record-high debt levels. If some countries eventually require debt restructuring, this will be more difficult to achieve than in the past. Climate change may increase commodity price volatility, creating challenges for the almost two-thirds of emerging market and developing economies that rely heavily on commodity exports and highlighting the need for asset diversification. Social tensions may heighten as a result of the increase in inequality caused by the pandemic. These challenges underscore the importance of strengthened global cooperation to promote a green, resilient, and inclusive recovery path.Publication Opening Remarks During the Media Call on the Analytical Chapters of the June 2020 Global Economic Prospects Report(World Bank, Washington, DC, 2020-06-02)These opening remarks were delivered by World Bank Group President David Malpass during the media call on the analytical chapters of the June 2020 global economic prospects report on June 2, 2020. He covered about Bank's support activities, the debt service moratorium for the poorest countries, the progress on debt transparency and some of the next steps. He spoke about how the World Bank Group resources are being scaled up dramatically, providing strong net positive flows, especially to the poorest countries. He highlighted on IDA and IBRD working with countries to expand the coverage of social safety net programs, IFC providing finances to the private sector in developing countries over fifteen months, and MIGA helping to provide a more stable environment for investment by mitigating and managing risks arising from uncertainty. He described the debt moratorium that the World Bank and IMF championed, where the Debt service payments by all official bilateral creditors were suspended on May 1, adding to the potential resources for the poorest countries. He stated that an important part of this initiative is to help governments in debtor countries increase the transparency of their debt and investment practices and disclose the amounts and terms of their debt. He spoke about the Global Economic Prospects (GEP) report which finds a deep global recession, accompanied by a collapse in global trade, tourism and commodity prices and extraordinary market volatility. He said that beyond coping with the immediate crisis to limit the harm, policymakers can make a robust recovery more likely by maintaining private sector systems and infrastructure and allowing markets to allocate resources toward productive activities. He stated that most of the export restrictions that were announced earlier this year have not been implemented and global food prices have mostly remained stable. He highlighted on the important advances that are being made in digital connectivity in developing economies. He concluded by saying that the World Bank Group will continue to take broad, fast action in our response to the needs of people in developing countries.Publication Indonesia Economic Prospects, July 2020(World Bank, Washington, DC, 2020-07)The COVID-19 (coronavirus) pandemic and associated containment measures triggered the deepest global recession in eight decades. As many countries implemented lockdowns and travel restrictions, global demand for goods and services plummeted along with tourism flows and commodity prices; supply chains were disrupted; and financial market volatility spiked. The Government of Indonesia also implemented mobility restrictions from mid-March and then a partial lockdown from April to June, preventing many firms and shops from operating, and discouraging many consumers from shopping. Hit by severe external and domestic shocks, economic activity tumbled. Real GDP growth slumped from 5.0 percent yoy in Q4 2019 to 3.0 percent in Q1 2020, the lowest quarterly growth since 2001. Private consumption slowed as mobility restrictions and personal avoidance behavior curbed household consumption. Investment growth also declined with heightened uncertainty and lower commodity prices. There was broad-based slowdown across sectors. Manufacturing, construction and low value-added service sectors including transport, storage, hotels and restaurants, sectors that employ a larger number of workers, all saw a near halving in their sectoral growth rates from Q4 2019. In contrast, growth of modern, knowledge-intensive services sectors, including digital, financial, education and health services accelerated. The slowdown in domestic demand and the unexpected growth in some manufactured exports helped narrow the current account deficit (CAD) to 2.5 percent of GDP in Q1 2020 from 2.7 percent of GDP in Q4 2019. The goods trade surplus soared, as some diversion of manufacturing production from China and higher palm oil prices earlier in the year propped up export values, while imports contracted due to lower consumption and, investment and falling oil prices. With the sudden stop in global travel and transport, both services exports and imports plunged.Publication Global Economic Prospects, June 2021(Washington, DC: World Bank, 2021-06-08)The world economy is experiencing a very strong but uneven recovery, with many emerging market and developing economies facing obstacles to vaccination. The global outlook remains uncertain, with major risks around the path of the pandemic and the possibility of financial stress amid large debt loads. Policy makers face a difficult balancing act as they seek to nurture the recovery while safeguarding price stability and fiscal sustainability. A comprehensive set of policies will be required to promote a strong recovery that mitigates inequality and enhances environmental sustainability, ultimately putting economies on a path of green, resilient, and inclusive development. Prominently among the necessary policies are efforts to lower trade costs so that trade can once again become a robust engine of growth. This year marks the 30th anniversary of the Global Economic Prospects. The Global Economic Prospects is a World Bank Group Flagship Report that examines global economic developments and prospects, with a special focus on emerging market and developing economies.Publication Tanzania Economic Update, June 2020(World Bank, Washington, DC, 2020-06-07)State of the economy: In 2019 growth in Tanzania’s economy was again solid, but this year COVID-19is expected to cut GDP growth at least in half and increase poverty. Growth slowdown in Tanzania’smain trade partners has reduced demand and prices for its agricultural commodities and final manufactured goods, and international travel bans and fear of contracting the virus are expected to inhibit the recovery of tourism, which has been one of the fastest-growing sectors in the economy. Domestic business conditions are expected to deteriorate. The current outlook is highly uncertain,and risks are tilted to the downside especially if global demand remains suppressed or government actions are not strong, well-targeted or sustained. The risks for a more negative growthoutlook than the baseline described above are high. Under a severe local outbreak, Tanzania’s health care system would become heavily strained, and self-imposed social distancing could dampenmuch of the economy. This would likely lead to a delayed economic recovery, and Tanzania would face continued pressures to finance additional health spending to save lives and providesupport to protect livelihoods. Even if the outbreak is contained in Tanzania, a protracted/resurging global health crisis that continues in 2021 could undermine global demand, and thus, the Tanzanian economy. Furthermore, even if the global health crisis is contained and Tanzania’s COVID-19 reported cases also decrease, additional trade and logistics restrictionscould continue disrupting global trade during the recovery. Tanzania’s macroeconomic performance has been strong for the last decade, but the current crisis is an unprecedented shock that requires strong, well-targeted and sustained policy response.
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