Although global economic growth forecasts are cut sharply, food demand shou...
2020-06-15 3 ENGLISH REPORTS
Global spillovers to EMDEs. These adverse demand and supply shocks have resulted in crossborder spillovers to EMDEs through multiple channels—real channels, including disruptions in global trade, supply chains, travel, and tourism; and financial channels, including sharp declines in remittance flows and large capital outflows amid a flight to safety in March. Commodity prices have been depressed by the sharp decline in demand and, with oil the most affected. These cross-border spillovers have been amplified by plunging confidence and rising uncertainty. Initial impact: Economic activity, financial and commodity markets Consistent with the gravity of the shocks and spillovers discussed above, recent data point to substantial disruptions in global activity and trade, a sharp tightening of financial conditions, and a severe decline in commodity prices (Chapter 1).
With international travel restricted and internal travel discouraged in most countries, global tourism and travel have been severely curtailed. So far this year, tourist arrivals declined by nearly 100 percent among reporting countries. Globally, the number of commercial flights is down about 70 percent since the beginning of the year. Disruptions to production and international transport have increased the risk that critical inputs will be unavailable, potentially leading to cascading production shortfalls in global value chains. Manufacturers’ stocks of purchases have fallen, while suppliers’ delivery times have lengthened. Industries reliant on “just-in-time” inputs from global value chains and lean inventories have been particularly affected. In the automobile sector, a collapse in demand, combined with production and delivery challenges, has led to a precipitous plunge in sales worldwide. Global financial conditions Global equity markets fell sharply as the pandemic spread across the world. Within a week of reaching an all-time high in mid-February, the S&P 500 index in the United States experienced its fastest decline since October 1987, and stock markets in other major economies experienced declines of similar magnitude. The VIX volatility index more than quadrupled in March before settling at about double its February value in midMay.
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