RAPID Talk: Declining export earnings and remittances
করোনা প্রেক্ষাপটে বাজেট ভাবনা
COVID-19 impact and the world economy in 8 charts:
An Analysis by RAPID
M Abu Eusuf and Jillur Rahman
The first case of COVID-19 (Coronavirus) was reported in Wuhan, China, in late December 2019. As of 31 May 2020, over 6.2 million COVID cases have been reported in over 200 countries and territories around the world. So far, the virus killed above 3,71,000 people worldwide, with the highest number of deaths above 1,05,000 being reported in the United States.
The COVID-19 pandemic is causing an unprecedented disruption for the global economies. The resultant socio-economic impact is being transmitted through different channels. The IMF warned that the pandemic might push the global economy into a worst recession since the Great Depression of the 1930s, and far worse than the one triggered by the Global Financial Crisis in 2008-09, with the poorest countries being the hardest hit. As per IMF projections, the global economy would contract by 3 percent in 2020, while the World Bank thinks the global economy to decline by 2.1-3.9 per cent. Using simulations a from a general equilibrium modelling exercise, the Asian Development Bank (ADB) derives that the global economy could lose between $5.8 trillion and $8.8 trillion – equivalent to 6.4 per cent to 9.7 per cent of global gross domestic product (GDP).
Global trade contracted by 3 per cent in the first quarter of 2020. According to UNCTAD, the downturn would accelerate in the second quarter so the world trade would decline by 27 per cent. This is echoed by the World Trade Organization (WTO), which has projected that the world merchandise trade would shrink between 13 and 32 per cent in 2020.
The COVID-19 pandemic is expected to cause huge job losses for migrant workers and thus affect remittance flows. According to Institute for Public Policy Research, migrant workers are particularly likely to work in accommodation and food services, one of the most affected sectors in the COVID crisis. The World Bank projections found that global remittance flows would decline sharply by 20 percent in 2020. Europe and Central Asia will experience the largest fall of 27.5 per cent, followed by Sub-Saharan Africa (23.1 percent), South Asia (22.1 percent), the Middle East and North Africa (19.6 percent), Latin America and the Caribbean (19.3 percent), and East Asia and the Pacific (13 percent).
Worldwide FDI flow is expected to drop by about 35 percent due to travel bans, disruption of international trade, and wealth effects of declines in the stock prices of multinational companies.
About 94 per cent of the world’s employed workforce are living in countries with some sort of workplace closure measures in place while around one-fifth of these live in countries that have closed all workplaces apart from those deemed essential. The decline in working hours around the world in the first quarter of 2020 is equivalent to approximately 135 million full-time jobs losses which would increase to 305 million in the second quarter. The crisis is hitting young workforce, especially young women, more severely than any other group. The ILO survey found that more than one in six young people have stopped working since the onset of the crisis. Young people who remain employed experienced a 23 per cent cut in their working hours.
The COVID-19 pandemic is likely to cause an increase in global poverty for the first time since the 1990s. According to a UNU-WIDER estimate, the number of people living in poverty could increase by 420–580 million. The World Bank estimates that the share of the population living in extreme poverty (incomes less than $1.90 per day) will rise by 40-60 million. The United Nations, however, put the number in the range of 84–132 million. According to the Save the Children and UNICEF, the COVID-19 pandemic could push an additional 86 million children into household in poverty by the end of 2020.
The world could see the number of hungry people double in the aftermath of this crisis, as per the World Food Porgramme (WFP). As per the Global Report on Food Crises, there were 135 million people in acute food insecurity in low and middle-income countries last year. That figure could almost double to reach 265 million in 2020.
Prices of primary commodities plummeted in the first quarter of 2020. UNCTAD's free market commodity price index (FMCPI), overall prices of primary commodities - exported by developing economies - declined by a whopping 20 per cent in March. This is the highest fall in commodity prices in recent history with the comparable figure during the global financial crisis of 2008 was around 18 per cent. Quite strikingly, the prices of crude oil became negative in April, which however recovered in May.
RAPID Talk: Declining export earnings and remittances
করোনা প্রেক্ষাপটে বাজেট ভাবনা
COVID-19 impact and the world economy in 8 charts:
An Analysis by RAPID
M Abu Eusuf and Jillur Rahman
The first case of COVID-19 (Coronavirus) was reported in Wuhan, China, in late December 2019. As of 31 May 2020, over 6.2 million COVID cases have been reported in over 200 countries and territories around the world. So far, the virus killed above 3,71,000 people worldwide, with the highest number of deaths above 1,05,000 being reported in the United States.
The COVID-19 pandemic is causing an unprecedented disruption for the global economies. The resultant socio-economic impact is being transmitted through different channels. The IMF warned that the pandemic might push the global economy into a worst recession since the Great Depression of the 1930s, and far worse than the one triggered by the Global Financial Crisis in 2008-09, with the poorest countries being the hardest hit. As per IMF projections, the global economy would contract by 3 percent in 2020, while the World Bank thinks the global economy to decline by 2.1-3.9 per cent. Using simulations a from a general equilibrium modelling exercise, the Asian Development Bank (ADB) derives that the global economy could lose between $5.8 trillion and $8.8 trillion – equivalent to 6.4 per cent to 9.7 per cent of global gross domestic product (GDP).
Global trade contracted by 3 per cent in the first quarter of 2020. According to UNCTAD, the downturn would accelerate in the second quarter so the world trade would decline by 27 per cent. This is echoed by the World Trade Organization (WTO), which has projected that the world merchandise trade would shrink between 13 and 32 per cent in 2020.
The COVID-19 pandemic is expected to cause huge job losses for migrant workers and thus affect remittance flows. According to Institute for Public Policy Research, migrant workers are particularly likely to work in accommodation and food services, one of the most affected sectors in the COVID crisis. The World Bank projections found that global remittance flows would decline sharply by 20 percent in 2020. Europe and Central Asia will experience the largest fall of 27.5 per cent, followed by Sub-Saharan Africa (23.1 percent), South Asia (22.1 percent), the Middle East and North Africa (19.6 percent), Latin America and the Caribbean (19.3 percent), and East Asia and the Pacific (13 percent). Worldwide FDI flow is expected to drop by about 35 percent due to travel bans, disruption of international trade, and wealth effects of declines in the stock prices of multinational companies.
About 94 per cent of the world’s employed workforce are living in countries with some sort of workplace closure measures in place while around one-fifth of these live in countries that have closed all workplaces apart from those deemed essential. The decline in working hours around the world in the first quarter of 2020 is equivalent to approximately 135 million full-time jobs losses which would increase to 305 million in the second quarter. The crisis is hitting young workforce, especially young women, more severely than any other group. The ILO survey found that more than one in six young people have stopped working since the onset of the crisis. Young people who remain employed experienced a 23 per cent cut in their working hours.
The COVID-19 pandemic is likely to cause an increase in global poverty for the first time since the 1990s. According to a UNU-WIDER estimate, the number of people living in poverty could increase by 420–580 million. The World Bank estimates that the share of the population living in extreme poverty (incomes less than $1.90 per day) will rise by 40-60 million. The United Nations, however, put the number in the range of 84–132 million. According to the Save the Children and UNICEF, the COVID-19 pandemic could push an additional 86 million children into household in poverty by the end of 2020.
The world could see the number of hungry people double in the aftermath of this crisis, as per the World Food Porgramme (WFP). As per the Global Report on Food Crises, there were 135 million people in acute food insecurity in low and middle-income countries last year. That figure could almost double to reach 265 million in 2020.
Prices of primary commodities plummeted in the first quarter of 2020. UNCTAD's free market commodity price index (FMCPI), overall prices of primary commodities - exported by developing economies - declined by a whopping 20 per cent in March. This is the highest fall in commodity prices in recent history with the comparable figure during the global financial crisis of 2008 was around 18 per cent. Quite strikingly, the prices of crude oil became negative in April, which however recovered in May.