October 16, 2020/IMF
A NEW BRETTON WOODS MOMENT
“Today we face a new Bretton Woods moment. A pandemic that has already cost more than a million lives. An economic calamity that will make the world economy 4.4 % smaller this year and strip an estimated $11 trillion of output by next year. And untold human desperation in the face of huge disruption and rising poverty for the first time in decades,” said Managing Director Kristalina Georgieva in her plenary speech yesterday. “We face what I have called a Long Ascent for the global economy: a climb that will be difficult, uneven, uncertain—and prone to setbacks. But it is a climb up. And we will have a chance to address some persistent problems—low productivity, slow growth, high inequalities, a looming climate crisis. We can do better than build back the pre-pandemic world—we can build forward to a world that is more resilient, sustainable, and inclusive.” Watch the full speech here.
OCTOBER 2020 WORLD ECONOMIC OUTLOOK
In our latest World Economic Outlook, we continue to project a deep recession in 2020. Global growth is projected to be -4.4 percent, an upward revision of 0.8 percentage points compared to our June update. This upgrade owes to somewhat less dire outcomes in the second quarter, as well as signs of a stronger recovery in the third quarter, offset partly by downgrades in some emerging and developing economies. In 2021 growth is projected to rebound to 5.2 percent, -0.2 percentage points below our June projection.
“If medical solutions can be available faster and more widely relative to our baseline, it could lead to a cumulative increase in global income of almost $9 trillion by end 2025, raising incomes in all countries and reducing income divergence,” said IMF Chief Economist Gita Gopinath at the press conference. Read her full blog here and watch the press briefing here.
OCTOBER 2020 GLOBAL FINANCIAL STABILITY REPORT
In our latest Global Financial Stability Report, we found that significant improvement in financial conditions has helped maintain the flow of credit to the economy, but the economic outlook remains highly uncertain. A disconnect persists, for example, between financial markets—where there have been rising stock market valuations (despite the recent repricing)—and the weak economic activity and uncertain outlook. This gap can gradually narrow if the economy recovers swiftly. But if the recovery is delayed, for example because it may take longer to get the virus under control, the investor optimism may wane. Read the full blog here by Financial Counsellor and Director of the IMF’s Monetary and Capital Markets Department Tobias Adrian. You can also watch the press briefing here. You can also listen to a new 19-min podcast on the report.
OCTOBER 2020 FISCAL MONITOR
We just published the October 2020 Fiscal Monitor, which examines countries’ experiences managing the crisis and discusses what governments can do in the different phases of the pandemic to save lives, reduce the impact of the recession, and revive growth and job creation.
“As economies begin to recover, governments should seize this moment to move away from the pre-crisis growth model and accelerate the transition to a low-carbon and digital economy. Carbon pricing should be a key feature of this transition, because it encourages people to reduce energy use and shift to cleaner alternatives—and, moreover, it generates revenue that can be used in part to support the most vulnerable,” write the IMF’s Vitor Gaspar, Paulo Medas, John Ralyea, and Elif Ture in a new blog. You can also listen to a new 17-min podcast on the report.
Press briefing speakers included Vitor Gaspar, Director, Fiscal Affairs Department, IMF; Cathy Pattillo, Assistant Director, Fiscal Affairs Department, IMF; and Paolo Mauro, Deputy Director, Fiscal Affairs Department, IMF. The event will be moderated by Ting Yan, Communications Officer, Communications Department, IMF. Watch the event here.
COVID-19 AND THE GLOBAL ECONOMY
The world economy has been hit by the biggest shock in the postwar era. Governments have responded with unprecedented measures to protect lives and livelihoods. Are we out of the woods yet? Moderated by Geoff Cutmore, Anchor, CNBC, this televised debate featured Kristalina Georgieva, Managing Director, IMF; Christine Lagarde, President, European Central Bank; Sri Mulyani Indrawati, Finance Minister, Indonesia; and Ngozi Okonjo-Iweala, Board Chair at GAVI / AU Special Envoy on response to COVID-19. Interested in some background reading? Check out our recommended reading list here (PDF) and watch the full event here.
In another event this week, Kristalina Georgieva and Melinda Gates had a lively video discussion moderated by CNN Anchor Becky Anderson, about how overcoming the pandemic requires investments—in testing, therapeutics, and vaccines—and global cooperation. Interested in some background reading on this topic? Click here for our recommended reading list (PDF).
European Central Bank President Christine Lagarde and IMF European Department Director Alfred Kammer also discussed the post-pandemic landscape and challenges for policy makers in Europe. Lagarde said that we need to address the pandemic and support the recovery by focusing on three kinds of policies: a sound regulatory environment, targeted public investment that encourages private investment, and both education and training. She also noted that citizens are going to drive change moving forward, and that 75 percent of the population in the Euro area expects their government to put environmental protection and climate change at the top of their priorities.
Also, make sure to carve out some time to watch a highly engaging discussion on recovery and resilience moderated by Francine Lacqua, Anchor, Bloomberg Television, London. The event featured Kristalina Georgieva, Managing Director, IMF, who said that governments need to focus on three priorities: improve health systems, avoid withdrawing stimulus support prematurely, and direct stimulus funding towards transforming the economy. Mark Carney, Finance Adviser to the Prime Minister for COP 26 and UN Special Envoy for Climate Action and Finance, also participated in the event, noting that climate change is now center stage for the private sector, financial sector and the real economy.
Laurence Fink, Chairman and Chief Executive Officer, BlackRock, Inc., said that as we move forward to a more digital society, the need for hydrocarbons is going to reduce, and that we should provide digital access to every household in the world, which would lead to a better quality of life and a better existence. Vera Daves de Sousa, Finance Minister, Angola, talked about her strategy for the next 12 months: we need to make sure we survive, that we preserve lives, that our health system does not collapse, and that our debt remains sustainable. Interested in reading up on these issues? Click here for our recommended reading list (PDF) or watch the event here.
LEARNING IN THE TIME OF COVID
The pandemic is exposing and exacerbating inequalities, putting tremendous pressure on students, parents, and teachers, and leaving millions of kids at risk of dropping out of school. These pressures could leave lasting scars on an entire generation of learners. Sal Khan, Founder and CEO of the Khan Academy, and Sabina Bhatia, Deputy Secretary of the IMF, discussed the challenges to our students and our education systems, the value and limitations of virtual learning, and the long-term impact on our societies. Click here to watch the New Economy Forum: Learning in the Time of COVID.
ANALYTICAL CORNERS ON RECOVERY, CLIMATE, TECH AND MORE
This past week we hosted several series of Analytical Corners, the first focused on ensuring a fairer recovery, which included sessions on government support to firms during COVID-19, social spending for inclusive growth in the Middle East and Central Asia and more. The second set focused on climate change and scenario planning, which included sessions on a green recovery for sub-Saharan Africa, policy gaming at the IMF and more. The third set focused on technology in a new world, which included sessions on digitalization and the fight against COVID-19 in sub-Saharan Africa, technology adoption and economic resilience during the pandemic, and mobile money.
The fourth set of analytical corners focused on changing societies, which included sessions on the economic effects of migration, automation and jobs in Europe, and containment policies in Latin America. And the final series of discussions focused on life under lockdown, which covered on COVID-19 lessons from Asia, Germany’s Short-Time Work Program, and the broader economic effects of the Great Lockdown.
GOVERNOR’S TALKS: MOROCCO, ANGOLA AND INDONESIA
As part of the Governor Talks series, Mohamed Benchaaboun, Minister of Economy and Finance of Morocco, was is in discussion with Jihad Azour, Director of the Middle East and Central Asia Department, IMF, on his country’s response to COVID-19. And be sure to watch other Governor’s Talks with Vera Daves de Sousa, Minister of Finance of Angola, who talked about fiscal consolidation and prudent public finances, as well as Perry Warjiyo, Governor of Bank Indonesia, who spoke about their policy mix during COVID-19.
CAPACITY DEVELOPMENT TALKS: DEBT, GOVERNANCE AND CORRUPTION
Against the backdrop of rising debt levels in low-income countries, exacerbated by the COVID-19 pandemic, we hosted a Capacity Development talk that highlighted the ongoing efforts to strengthen countries’ capacity to manage debt vulnerabilities and mitigate fiscal risks. Speakers included Roger Nord, Institute for Capacity Development, IMF; Peter Breuer, Monetary and Capital Markets Department, IMF; Oana Croitoru, Institute for Capacity Development, IMF; Clement Ncuti, Statistics Department, IMF; Marcos Chamon, Strategy and Policy Review Department, IMF; and Amanda Sayegh, Fiscal Affairs Department, IMF.
In another CD talk, a wide range of panelists discussed the role of the IMF in helping sub-Saharan Africa to promote good governance and minimize the risk of corruption in the use of COVID-19 financial support. We also posted a new Governor Talk featuring a discussion with Azucena Arbeleche, Minister of Economy and Finance, moderated by Alejandro Werner, Director, Western Hemisphere Department, IMF. For more CD talks and events, click here.
NEXT WEEK’S AGENDA
Cross-Border Payment—A Vision for the Future (Moderator: Kristalina Georgieva, Managing Director, IMF Speakers: Ahmed Abdulkarim Alkholifey, Governor, Saudi Arabian Monetary Authority Agustín Carstens, General Manager, Bank of International Settlements Jerome Powell, Chair, Federal Reserve Nor Shamsiah Yunus, Governor, Central Bank of Malaysia).
We will also be launching Regional Economic Outlooks for the Middle East and Central Asia, Europe, Asia and the Pacific, sub-Saharan Africa, and the Western Hemisphere, among other events. Review the full live schedule here with updated live links.