China-Singapore Jingwei Client, April 15 (Wei Wei) The International Monetary Fund (IMF) released a new issue of the World Economic Outlook Report (hereinafter referred to as the "Report") on April 14, which is expected to increase global GDP in 2020 The rate is -3%, the worst economic recession since the Great Depression of the 1930s, and the severity is significantly higher than that of the global financial crisis of 2008-2009.
However, the report also stated that, assuming the epidemic subsides in the second half of 2020, prevention and control measures can be phased out. With policy support measures to help economic activities return to normal, the global economy is expected to grow by 5.8% in 2021.
The worst recession since the Great Depression
"Due to the epidemic, the global economy is expected to contract sharply by 3% in 2020." The IMF said in the report. In January this year, the organization had predicted that the global economy would grow by 3.3% in 2020. In just three months, the IMF ’s forecast had reversed.
The report pointed out that the epidemic is causing high and increasing costs worldwide. In order to protect lives and enable the medical system to respond to this outbreak, isolation, blockade, and extensive closures are needed to slow the spread of the virus. Therefore, the health crisis is having a serious impact on economic activity.
IMF chief economist Gita Gopinat said that this made the "big blockade" the worst economic recession since the "Great Depression" in the 1930s, much worse than the situation during the 2008-2009 global financial crisis .
"In a few months, the IMF's economic expectations have changed so much. The root cause is the occurrence of the new coronary pneumonia epidemic and its impact on the fundamentals of the global economy." Ming Ming, chief of fixed income of CITIC Securities, said in an interview with the client of Sino-Singapore Jingwei.
It is clearly analyzed that the current new coronary pneumonia epidemic continues to ferment globally. After more than two months of epidemic prevention and control in China, the overall epidemic is relatively stable, but in terms of overseas epidemics, many countries, especially Europe and the United States, have become the hardest hit areas. As the data of various countries are published one after another, the impact of the epidemic on global fundamentals is emerging.
He believes that the occurrence of economic crisis is generally conducted according to the chain of "emotional crisis-financial crisis-economic crisis". Under the impact of economic fundamentals in the future, the current situation may still develop from the second stage of the liquidity crisis to the first of the economic crisis. In three stages, the alarm for the crisis has not been lifted. Therefore, from the perspective of the pressure faced by the global economy, the IMF lowered its expectations for global economic growth.
According to Wang Qing, chief macro analyst of Dongfang Jincheng, the depth of the epidemic's impact on the global economy depends on its duration. At present, Europe and the United States are still in a period of high incidence. The risk of concentrated outbreaks in South Asia, Africa and Latin America is accumulating. In the first half of the year, the global epidemic is less likely to be fully controlled. The impact of the epidemic is also difficult to subside completely. This means that the global economic growth in 2020 will continue to be shrouded in the cloud of the epidemic, which will drag down the annual economic growth rate to a negative growth rate.
The economy of advanced economies is expected to shrink by 6.1%
The report shows that for advanced economies, the IMF expects the economy to grow by -6.1% in 2020 and recover to 4.5% in 2021. Among them, the economic growth rate of the United States in 2020 is expected to be -5.9%, and 4.7% in 2021; the economic growth rate of the euro zone in 2020 is expected to be -7.5%, and 4.21 in 2021; the economic growth rate for Japan in 2020 is expected to be- 5.2%, 3% in 2021.
For emerging markets and developing economies, the IMF expects the economy to grow by -1% in 2020 and recover to 6.6% in 2021. Among them, the IMF's economic growth rate for Asia-Pacific emerging markets and developing economies is expected to be positive, with an expected growth rate of 1%.
"World Economic Outlook" latest growth forecast source: International Monetary Fund
Wang Qing analyzed that after March, the new coronary pneumonia epidemic showed a trend of accelerating global spread. Developed economies such as Europe and the United States began to adopt measures such as strict blockades, isolation, and home bans. This has had a severe impact on both the supply and demand sides of the macro economy, and consumption, investment and trade activities have contracted significantly. The Fed and other agencies have predicted that the US economic contraction rate may be between 20% and 50% in the second quarter, and the economic decline in Europe may be more severe. Due to the high proportion of developed economies in global GDP, the epidemic development in these areas and the severe impact on the economy will inevitably drag down global GDP growth.
However, Wang Qing also mentioned that the IMF will also update the global economic outlook in July. At that time, the possibility of adjusting the above forecasts will not be ruled out. He judged that the risk of downward adjustment was greater.
Stimulate economic recovery, many countries in action
The report points out that because economic impacts reflect a particularly severe impact on certain sectors, policymakers need to adopt large-scale, targeted fiscal, monetary, and financial market measures to support affected households and businesses. Many developed economies affected by the epidemic (such as Australia, France, Germany, Italy, Japan, Spain, the United Kingdom, and the United States) have implemented rapid and large-scale fiscal responses. Many emerging markets and developing economies (such as China, Indonesia, and South Africa) have also begun to provide or announce that they will provide strong financial support to sectors and workers that are severely affected.
Specifically, on March 27, the United States issued a fiscal stimulus plan totaling approximately US $ 2 trillion, which is the largest fiscal stimulus plan in US history.
On March 25 local time, the House of Representatives of the Canadian Parliament passed a total of 107 billion Canadian dollars (approximately 524.3 billion yuan) of the new coronary pneumonia epidemic rescue plan.
On March 17, the British government announced a loan and subsidy plan totaling up to 350 billion pounds (about 3.08 trillion yuan).
In the euro area, on March 17, French Finance Minister Le Merle announced an aid plan of 45 billion euros (about 346.855 billion yuan). On March 23, the German government announced a package of 750 billion euros (approximately 5.78 trillion yuan) to deal with the impact of the new coronary pneumonia epidemic. The Italian government most affected by the epidemic has issued a fiscal stimulus plan of 3.6 billion euros (approximately 28.757 billion yuan), and is preparing at least 50 billion euros (approximately 386.91 billion yuan) of financial assistance to deal with the impact of the epidemic.
In the Asia-Pacific area, the Japanese cabinet meeting passed the largest economic stimulus plan in history on April 7, totaling 108 trillion yen (approximately RMB 7 trillion). South Korea plans to implement an expansionary fiscal policy next year, and its budget may exceed 550 trillion won (about 3.1 trillion yuan). The Singapore government currently allocates nearly S $ 55 billion (about 237.64 billion yuan) to fight the epidemic.
In terms of monetary policy, the central banks of various countries have also made full use of their power, and they have started the loose mode.
Photo of the new latitude and longitude Xiong Siyi in the picture
On March 3, the Fed unexpectedly announced a 50 basis point rate cut to 1.00% -1.25%, which was its first rate cut outside the planning meeting since the 2008 financial crisis.
Less than two weeks later, on March 15th, the Federal Reserve announced a sudden interest rate cut to 0% -0.25%, and said it would buy 700 billion US dollars of government bonds and home mortgage-backed securities to deal with the economic impact of the new coronary pneumonia epidemic.
Zhu Jun, director of the International Department of the People's Bank of China, said recently that many economies around the world have taken aggressive monetary easing measures, and about 40 central banks cut interest rates in March.
Many analysts interviewed by Sino-Singapore Jingwei Client believe that under the influence of the current epidemic, countries around the world need to take measures to actively respond.
"The epidemic is essentially a natural disaster. There are serious resource mismatches or major policy errors in different economic and financial systems, so the correction and recovery cycle is short." Wang Qing said.
He judged that if the global epidemic was basically controlled later in the first half of the year, combined with effective monetary and fiscal policies to ease corporate bankruptcy and personnel unemployment during the epidemic, then the global economy could achieve a rapid recovery after the epidemic ended. On the contrary, the longer the epidemic is delayed, the weaker the economic rebound in the later period may be.
Wen Bin, chief researcher of China Minsheng Bank, said that measures need to be taken from two aspects. One is to effectively control the spread and spread of the epidemic. The development of the spread of the epidemic is now a global priority. Without effective control of the epidemic, economic and social life will be affected. Impact; Second, governments of all countries should increase their macro policies to deal with the crisis, including the introduction of fiscal and monetary policies and other related policies. These policies have played a positive role in preventing the economy from falling into recession.
It is also clear that in terms of policy, the top priority is the prevention and control policy of the new coronary pneumonia epidemic. The biggest uncertainty facing the current global economy is still the development of the global new coronary pneumonia epidemic. For the global economic recovery Therefore, effective control of the epidemic is crucial.
He further pointed out that countries need to adopt decisive monetary policies to stabilize demand and market confidence in a timely manner to ensure that credit can flow steadily to the real economy. At the same time, effective fiscal and monetary policies should be adopted to coordinate. The current policy mix of major countries in the world is the coordination of monetary + fiscal, and its monetary fiscalization features are obvious. Unlike overseas central banks directly purchasing government bonds, China ’s monetary and fiscal The cooperation depends on commercial banks, so China ’s monetary policy will remain loose to create conditions for commercial banks to undertake government debt.
China is becoming the "focus" of global recovery
The report points out that China's economic growth is expected to be 1.2% in 2020 and 9.2% in 2021.
"The IMF predicts that China's economy will maintain positive growth this year, mainly because China's early anti-disease effect has already appeared." Wang Qing analyzed that the duration of the peak period of the epidemic in China is relatively short, the current economy has entered the repair process, and the second outbreak The risk of waves is low. In addition, considering that China is one of the few countries in the world's major economies that maintains a relatively high positive interest rate, the government's debt ratio is relatively low, coupled with the strict financial supervision and strict control of the hidden debt of local governments in the previous two years, it has also prepared There is ample room for macro policy.
Wen Bin believes that the IMF predicts that China's economy can maintain positive growth. The main reason is that China's economy has turned to domestic demand-led development. Consumption expenditure has contributed more than 60% to economic growth. China's economic development space and potential are relatively large. There is a lot of room for urbanization, regional economy, new infrastructure and other fields.
According to Fan Ruoying, a researcher at the Bank of China Institute of International Finance, China's economy and finance are currently facing four major challenges: First, the epidemic has evolved into a "backflushing" risk arising from a global "pandemic". , A new stage of internal non-proliferation. Second, the risk of a global economic recession is rising, and further shrinking external demand will continue to pressure China's exports. The third is that a large number of countries affected by the epidemic have slowed or even stopped production. The global industrial chain and supply chain have been blocked or partially broken, which will bring great pressure to China's manufacturing industry. The fourth is the risk of contagion of financial market fluctuations. The dramatic fluctuations in overseas financial markets may have a negative impact on China's financial market from the emotional, capital and fundamental aspects.
"China's epidemic situation has achieved initial results, and resumption of production and production is also actively promoted, and various indicators have also picked up, but the spread and spread of the epidemic worldwide has also brought complexity and uncertainty to China's external demand. So, now The top priority is to stabilize and expand domestic demand. "Wen Bin said to the Sino-Singapore Jingwei client.
He believes that in terms of macro policy, it is necessary to increase counter-cyclical regulation, fiscal policy is more active and promising, and monetary policy is more flexible and appropriate. In terms of fiscal policy, one is to increase the fiscal deficit rate to more than 3%. The second is to increase the scale of local special bonds. It is recommended that the increase in local debt this year be more than 3 trillion. The third is to issue special national bonds with a scale of about 1 trillion. Through proactive fiscal policies, we ensure that our expenditures in key areas and weak links help enterprises, especially small and medium-sized enterprises, overcome difficulties through tax cuts and fee reductions.
In terms of monetary policy, Wen Bin believes that the main series of monetary policies currently adopted, including refinancing and re-discounting, are directed to support the real economy, especially small and medium-sized enterprises and private enterprises. In the next stage, we must maintain reasonable and sufficient liquidity. Effectively reduce the financing cost of the real economy.
Wang Qing pointed out that according to the deployment of the Politburo meeting on March 27, a comprehensive policy response plan will be issued in the second quarter to increase macroeconomic policy adjustment and implementation. He expects that this plan will focus on active fiscal policy, and monetary policy will mainly play a supporting role to avoid flooding.
The specific content of the fiscal policy may include: the scale of tax reduction and fee reduction for the whole year reaches 2 trillion, guided by local government special debt funds, greatly increasing the growth rate of infrastructure investment, including new infrastructure, to double-digit, large-scale distribution Subsidies for recruitment and stabilization. This year's fiscal deficit rate target may be raised to about 3.8%, an increase of 1 percentage point from the previous year; the scale of new local government special bonds will reach 3.5 trillion, an increase of 1.35 trillion from the previous year; the issuance of special national bonds for commercial banks, scale It is possible to reach the trillion level.
In terms of monetary policy, Wang Qing believes that the MLF interest rate will also be reduced by 30 basis points after April, which will guide the LPR quotation to continue to fall; the overall RRR cut is expected to be implemented 2-3 times during the year, with a total reduction of 1.0 to 1.5 percentage points. In addition, in the second half of the year, with the obvious fall in price increases, the central bank may also slightly reduce the 1-year deposit benchmark interest rate by 0.25 percentage points to encourage banks to further reduce corporate financing costs.
He said that China's structural monetary policy tools are relatively rich, mainly including targeted RRR cuts, re-loan rediscounts, special loans, MPA assessment index adjustments, TMLF (directional medium-term loan facility), private enterprise bond financing support tools, etc. The next step is to strengthen the directional drip irrigation, the above tools have room for effort.
Wang Qing judged that after the impact of the epidemic in the first quarter hits a high point, China ’s GDP will return to a positive year-on-year growth in the second quarter. Digits. He believes that the IMF's forecast for China's economic growth this year may be raised. (Sino-Singapore Jingwei app)
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