Background Information
The major issue currently roiling global commodity and financial markets and at the same time prompting recession fears across the globe is the economic crisis that could be the end-result of coronavirus pandemic. This trend is similar to the global financial crisis/great recession of 2008-09 that had its precedence from the sub-prime mortgage crisis (marked by a sharp decline in housing prices such that mortgage borrowers had serious repayment difficulties)
in the US in 2007. One of the major drivers of the crisis that is non-economic but was completely ignored by the US and the global economies that took a heat from the GFC is termed "the role of complacency".
The major issue currently roiling global commodity and financial markets and at the same time prompting recession fears across the globe is the economic crisis that could be the end-result of coronavirus pandemic. This trend is similar to the global financial crisis/great recession of 2008-09 that had its precedence from the sub-prime mortgage crisis (marked by a sharp decline in housing prices such that mortgage borrowers had serious repayment difficulties)
in the US in 2007. One of the major drivers of the crisis that is non-economic but was completely ignored by the US and the global economies that took a heat from the GFC is termed "the role of complacency". A simple description of the term "complacency" is when economic agents (households, business firms, government and the external sector) feels that whatever goes up will not come down. It represents a belief that good times will last longer forgetting the fact that economies and humans alike are characterized by ups (boom) and downs (bust). I respect Aristotle for his assertion that "don't be too joyous in times of prosperity and don't be too depressed in turbulent times". Why did we see John Maynard Keynes coming to tell us that the only effective way out of recessionary gap (actual output being less than its potential level) is for the government to embark on deficit budget in order to boost aggregate/effective demand. This warranted the shift to fiscal and monetary policy/quantitative easing in advanced countries and emerging markets alike.
The Crux of my argument is that history is becoming to repeat itself since 2008 with the rapid spread of the deadly epidemic from China to the rest of the world. Again complacency is at work. The epidemic called COVID-19 which started as a mere health crisis in China in November 2019 is now becoming a global threat as world economies are being adversely affected through the supply and demand channels - notably disruptions to global supply chain, multiple closure of businesses and lower inventories, panic buying among others. Why won't a global recession be likely. Meanwhile, in response to the global pandemic, world economies have returned to an era of accommodating fiscal and monetary policy measures. Just imagine the US Fed slashing its benchmark interest rate by 125 basis points (100bps = 1%) to a range of 0%-0.5% in an extraordinary meeting earlier this month. Back at home, during its second meeting in the year 2020 - March 23/24, Nigeria's monetary policy committee (MPC) retained its monetary policy rate (MPR) at 13.5%. The committee members also kept other monetary policy parameters at their current levels (cash reserve ratio at 27.5%, liquidity ratio at 30% and an asymmetric corridor of +200/-500 basis points around the MPR). Previously the CBN earmarked a sum of N50 billion to support households and SMEs across Nigeria. As if this is not enough, it also extended loan repayment period for intervention fund programs by 1 year while also reducing the cost of borrowing these funds from 9% to 5% all in the name of moderating the adverse effect of COVID-19 pandemic on the Nigerian economy.
In my own little opinion, the possibility of a global recession in 2020 just like the great recession of 2008/09 depends on the pervasiveness of the deadly epidemic in the rest of 2020.
Dear Wasiu Adekunle,
Please find below several useful reports and scenario analyses:
https://www.oecd.org/economic-outlook/
https://www.mckinsey.com/~/media/mckinsey/business%20functions/risk/our%20insights/covid%2019%20implications%20for%20business/covid%2019%20march%2025/covid-19-facts-and-insights-march-25-v3.ashx
https://www.cpb.nl/sites/default/files/omnidownload/CPB-Scenarios-March-2020-Scenarios-economic-consequences-corona-crisis.pdf
file:///C:/Users/PCU/Downloads/Outlook%20-%20Global-Macro-Outlook-2020-21-March-25-2020-Update%20-%2025Mar20.pdf
file:///C:/Users/PCU/Downloads/LBS-The%20economics%20of%20a%20pandemic-%20the%20case%20of%20Covid-19.pdf.pdf.pdf
Most of them support the assertion by U.N. chief Antonio Guterres, who warned that a global recession, “perhaps of record dimensions”, was a near certainty.
In my opinion, it is still far away the moment indicating simultaneous reduction of total confirmed cases
https://www.who.int/emergencies/diseases/novel-coronavirus-2019/situation-reports
which might indicate crisis mitigation and eventual recovery.
All the best,
Monica
Wasiu Adekunle
https://www.nytimes.com/2020/04/01/business/economy/coronavirus-recession.html
There is no difference or value addition and contribution in the public space for this question. The issuer or presenter is hereby referred to the existing discourse on the matter that existed for about five week and therefore collapse this session.
There is nothing new here. Thank you
yes , i agree with that one hindered percent , according to the results that appear recently
Breaking News: The world's second largest economy China contracts by 6.8% year-on-year in Q1'2020 since 1992 over COVID-19 pandemic (for more details, refer to: https://www.bloomberg.com/news/articles/2020-04-17/china-s-economy-contracts-for-first-time-since-at-least-1992). What does this mean for global oil demand going forward, as Brent crude currently trades around $28.5pb (Track this development via - https://www.bloomberg.com/quote/CO1:COM)? In a related development, Saudi Arabia & Russia are planning deeper oil production cuts to revive oil prices from its current slump. What implications could we draw for Nigeria in terms of its trade & investment relations with China as well as the country's external reserves position as the biggest forex earner (crude oil) continues its plunge???
Yes, the IMF has already published its projections:
https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020
“As a result of the pandemic, the global economy is projected to contract sharply by –3 percent in 2020, much worse than during the 2008–09 financial crisis. In a baseline scenario, which assumes that the pandemic fades in the second half of 2020 and containment efforts can be gradually unwound, the global economy is projected to grow by 5.8 percent in 2021 as economic activity normalizes, helped by policy support…”
Please check Table 1.1. and Annex tables.
Recession is kind of unavoidable, But, if the situation become worsen, it will lead to developing economies towards depression.
Yes, due to the SARS-CoV-2 (Covid-19) coronavirus pandemic, the global economy has entered a recession in 2020. the largest decline in economic activity occurred during the 1st wave of the pandemic in March - April 2020. On the other hand, for 2021, the global economy is expected to recover from recession. A key indirect factor is the issue of efficient implementation of vaccination programs of citizens against Coronavirus and the scale of social growth, collective population immunity of the society.
Greetings, Have a nice day, Stay healthy!
Dariusz Prokopowicz