The competitive pressures from shale may also feed into global gas markets...
2020-10-28 5 ENGLISH REPORTS
Production of a safe, effective vaccine would prevail over all other upside risk factors. If produced at the needed scale and distributed worldwide at affordable prices, such a vaccine would lift sentiment and yield better growth outcomes than in the baseline, including by allowing for a fuller recovery in contact-intensive sectors and travel. Some of these aspects are featured in Scenario Box 1, which presents growth projections under alternative scenarios. Downside risks, however, remain signifcant. Tey include the following: • Outbreaks could recur in places. If the virus resurges, and progress on treatments and vaccines is slower than anticipated or countries’ access to them remains unequal, economic activity could be lower than expected, with renewed social distancing and tighter lockdowns. Cross-border spillovers from weaker external demand could further magnify the impact of country- or region-specific shocks on global growth. • Premature withdrawal of policy support, or poor targeting of measures because of design and implementation challenges, could lead to the dissolution of otherwise viable and productive economic relationships, exacerbating misallocation. • Financial conditions may again tighten, as in March, exposing vulnerabilities. A sudden stop in new lending (or failure to roll over existing debt) would tip some economies into debt crises and slow activity further.
Liquidity shortfalls and insolvencies. Deep recessions invariably entail widespread liquidity shortfalls as firms suffer immediate revenue losses but still have to meet payroll expenses, cover fixed costs, and fulfill debt service obligations. Prolonged liquidity shortfalls can readily translate into bankruptcies and firm closures. This time around, there have been a few prominent bankruptcies, for example in retail and rental car sectors, and the rate of corporate bond defaults more broadly is at its highest since the global financial crisis (June 2020 GFSR Update). However, the aggressive and swift policy countermeasures have so far likely prevented even more widespread bankruptcies. But considering the severity of the recession and the possible withdrawal of some of the emergency support in some countries, the risk of a wider cross-section of firms experiencing deep liquidity shortfalls and bankruptcies is tangible (Box 1.3). Such events would lead to large job and income losses, further weakening demand. At the same time, they would deplete bank capital buffers and constrain credit supply, compounding the downturn. Intensifying social unrest. Instances of social unrest increased globally in 2019 before declining during the early part of the pandemic (Box 1.4). While ultimate causes vary across countries, in many cases, these include declining trust in established institutions and lack of representation in governance structures, as well as a perceived disconnect between leaders’ priorities and the problems faced by the public. In June, social unrest increased in the United States and quickly spread worldwide in protests against institutional racism and racial inequality.
标签： ENGLISH REPORTS