In its latest World Economic Outlook, the International Monetary Fund said global economic growth was projected at a minus 4.9% in 2020, 1.9 percentage points below the April 2020 forecast.
The COVID-19 pandemic has had a more negative effect on activity in the first half of 2020 than expected, and the recovery was projected to be more gradual than previously forecast.
In 2021, global growth was projected at 5.4%. This would leave 2021 GDP about 6.5 percentage points lower than pre-COVID-19 projections of January. The adverse effect on low-income households is particularly acute, imperiling the progress made in reducing worldwide extreme poverty since the 1990s.
GREATER UNCERTAINTY
There is a higher-than-usual degree of uncertainty around this forecast. The baseline projection rests on key assumptions about pandemic fallout.
In economies with declining infection rates, the slower recovery path in the updated forecast reflected persistent social distancing into the second half of 2020, greater damage to supply potential from the larger-than-anticipated hit to activity during the lockdown and a hit to productivity as surviving businesses ramp up workplace safety and hygiene practices.
For economies struggling to control infection rates, a lengthier lockdown will inflict an additional toll on activity. Moreover, the forecast assumes that financial conditions, which have eased following the release of the April 2020 WEO, will remain near current levels.
Alternative outcomes are possible, and not just because of how the pandemic is evolving. The extent of the recent rebound in financial market sentiment appears disconnected from shifts in underlying economic prospects, raising the possibility that financial conditions may tighten more than assumed.
HEALTHCARE STRENGTH URGED
All countries should ensure that their health care systems are adequately resourced. Governments must vastly step up support of national initiatives, including financial assistance to countries with limited health care capacity and channeling of funding for vaccine production as trials advance, so adequate, affordable doses are available.
Where lockdowns are required, economic policy should continue to cushion household income losses with sizable, targeted measures as well as provide support to firms suffering the consequences of mandated restrictions on activity.
Where economies are reopening, targeted support should be unwound gradually as the recovery gets underway, and policies should provide stimulus to lift demand and ease and incentivize the reallocation of resources away from sectors likely to emerge persistently smaller after the pandemic.
Strong multilateral cooperation remains essential on multiple fronts. Liquidity assistance is needed urgently for countries confronting health crises and external funding shortfalls, including through debt relief and financing through the global financial safety net.
Beyond the pandemic, policymakers must cooperate to resolve trade and technology tensions that endanger an eventual recovery.
Furthermore, building on the record drop in greenhouse gas emissions during the pandemic, policymakers should implement climate-change mitigation commitments and work together to scale up equitably designed carbon taxation or equivalent schemes.
CATTLE, BEEF RECAP
Fed cattle sold last week in the Plains at $93.50 to $98 per cwt on a live basis, down $4.50 to $7 from the previous week, and at $152 to $156 dressed, down $5 to $11.
The USDA choice cutout Monday was up $1.19 per cwt at $208.36, while select was up $1.86 at $100.71. The choice/select spread narrowed to $7.65 from $8.32 with 90 loads of fabricated product sold into the spot market.
Eleven heifer and nine steer contracts were tendered for delivery at zero Monday against the Jun live cattle futures contract. All were demanded.
The CME Feeder Cattle index for the seven days ended Friday was $129.68 per cwt, down $0.36. This compares with Monday’s Aug contract settlement of $133.50, up $0.90.