Generali Group

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          Lights and shades in the global economy

          And UNICEF reminds us of the importance of a ceasefire for 250 million children


          What will the future of the economy be outside Europe where the spread of COVID-19 differs? The International Monetary Fund, whose global forecasts we have already quoted in recent days (https://www.generali.com/media/News/covid-19-emergency/Cautious-optimism-and-confidence-in-recovery), tries to answer this question on an uncertain global future.

          In Latin America, the pandemic is continuing to spread throughout the region and, writes the IMF (https://blogs.imf.org/2020/04/16/economic-policy-in-latin-america-and-the-caribbean-in-the-time-of-covid-19/), countries are facing “the worst economic recession since countries started producing national accounts statistics in the 1950s. The challenging external environment, coupled with needed measures to contain the pandemic, have led to a sharply declining of economic activity across Latin America”, where growth could shrink by 5.2 percent in 2020.

          It continues, “a strong recovery in 2021 can be expected”. Yet, even “under this quick recovery scenario”, the region faces the spectre of another “lost decade” during 2015-2025 period. Although with different speed[s], by now most countries in the region have “taken significant public health measures to contain the spread of the virus, such as social distancing and restrictions on nonessential activities”. According to the Fund, countries “have also increased the amount of fiscal resources allocated to healthcare”, while the central banks of the region “have reduced policy rates and taken measures to support liquidity and to counteract disorderly conditions in domestic financial markets”. But many countries will not be able to access sufficient resources on their own, and so far, “out of close to a 100 countries that have requested emergency financing from the IMF, 16 are from Latin America and the Caribbean”.

          As for the Asia-Pacific region, the IMF estimates that 2020 growth will be zero (https://blogs.imf.org/2020/04/15/covid-19-pandemic-and-the-asia-pacific-region-lowest-growth-since-the-1960s/), “the worst growth performance in almost 60 years”. On the other hand, Asia seems to be doing better than other parts of the planet. “Downward revisions”, writes the IMF, “range from 3.5 percentage points in the case of South Korea to over 9 percentage points in the case of Australia, Thailand and New Zealand”, all hit by the global slowdown in tourism and, in the case of Australia, by lower commodity prices. “If containment measures work, and with substantial policy stimulus to reduce “scarring”, growth in Asia is expected to rebound strongly”, estimates the IMF, also because China’s economy is “beginning to get back to work”. “If containment measures work, and with substantial policy stimulus to reduce “scarring”, growth in Asia is expected to rebound strongly”, estimates the IMF, also because China’s economy is “beginning to get back to work”.

          However, the economy is not the only factor. “Today”, the UN Children's Fund reminds us (https://www.unicef.org/press-releases/covid-19-global-ceasefire-would-be-gamechanger-250-million-children-living-conflict), “there are 250 million children around the world living in areas under conflict”. To help them, according to UNICEF, the warring parties should listen to UN Secretary General Antonio Guterres’s call for a global ceasefire. At least during the pandemic. An appeal reiterated by the Pope on 29 March, unfortunately largely ignored except for some rare cases.