As countries around the world contend with the health emergency of the COVID-19 pandemic, the economic effects of mitigation measures have immediately impacted the world’s commodity markets and are likely to continue to affect them in the longer term.
The global economic shock of the pandemic has driven most commodity prices down and is expected to result in substantially lower prices over 2020, the April Commodity Markets Outlook reports. The following figures are courtesy of the World Bank.
The COVID-19 pandemic is expected to plunge most countries into recession in 2020, with per capita income contracting in the largest fraction of countries globally since 1870. Advanced economies are projected to shrink 7 percent. That weakness will spill over to the outlook for emerging markets and developing economies, who are forecast to contract by 2.5 percent as they cope with their own domestic outbreaks of the virus.
Taking care of the land and preserving biodiversity – through healthy soil, reliable water access and pollinators – is vital for providing livelihoods for rural populations, particularly during times of economic shock like that caused by the current COVID-19 pandemic.
Healthy ecosystems have been shown to provide a lifeline to the poorest. The Poverty Environment Network project that collects income data of forest adjacent communities from 24 countries, estimates that environmental income (most of it from the forest) represents 28 percent of total income of these households
According to the Asian Development Bank the global economy could suffer between USD5.8 trillion and USD8.8 trillion in losses—equivalent to 6.4% to 9.7% of global gross domestic product (GDP)—as a result of the Corona Virus pandemic.
The report finds that economic losses in Asia and the Pacific could range from USD1.7 trillion under a short containment scenario of 3 months to USD2.5 trillion under a long containment scenario of 6 months, with the region accounting for about 30% of the overall decline in global output. The People’s Republic of China (PRC) could suffer losses between USD1.1 trillion and USD1.6 trillion.
Governments around the world have been quick in responding to the impacts of the pandemic, implementing measures such as fiscal and monetary easing, increased health spending, and direct support to cover losses in incomes and revenues. Sustained efforts from governments focused on these measures could soften COVID‑19’s economic impact by as much as 30% to 40%, according to the report. This could reduce global economic losses due to the pandemic to between $4.1 trillion and $5.4 trillion.
The analysis, which uses a Global Trade Analysis Project-computable general equilibrium model, covers 96 outbreak-affected economies with over 4 million COVID-19 cases. In addition to shocks to tourism, consumption, investment, and trade and production linkages covered in the ADO 2020 estimates, the new report includes transmission channels such as the increase in trade costs affecting mobility, tourism, and other industries; supply-side disruptions that adversely affect output and investment; and government policy responses that mitigate the effects of COVID-19’s global economic impact.
Under the short and long containment scenarios, the report notes that border closures, travel restrictions, and lockdowns that outbreak-affected economies implemented to arrest the spread of COVID-19 will likely cut global trade by $1.7 trillion to $2.6 trillion. Global employment decline will be between 158 million and 242 million jobs, with Asia and the Pacific comprising 70% of total employment losses. Labor income around the world will decline by $1.2 trillion to $1.8 trillion—30% of which will be felt by economies in the region, or between $359 billion and $550 billion.
Source: ADB staff estimates.
Note: The 3-month and 6-month containment periods assumed in the scenarios are country-specific. They are the assumed time needed for a country to get a domestic outbreak under control from when the outbreak intensifies and start normalizing economic activity.
Apart from increasing health spending and strengthening health systems, strong income and employment protection are essential to avoid a more difficult and prolonged economic recovery. Governments should manage supply chain disruptions; support and deepen e-commerce and logistics for the delivery of goods and services; and fund temporary social protection measures, unemployment subsidies, and the distribution of essential commodities—particularly food—to prevent sharper falls in consumption, the report says.
According figures released by the National Bureau of Statistics, Large Scale Industrial Enterprise Profits decreased by 27.4 percent falling to 1.256 trillion RMB
In the Q1, among the industrial enterprises above designated size, the profits of state-holding Industrial enterprises were around 304.63bn RMB, a decrease of 46.0 percent year-on-year; that of joint-stock enterprises stood at 924.9b RMB, a fall of 26.6 percentage points; and that of foreign funded enterprises, and enterprises funded from Hong Kong, Macao and Taiwan fell by 28.8 percent to 312.13bn RMB; private enterprises lost 17.2 percent y-o-y to 392.01bn.
At the same time, profits of the mining and quarrying sector decreased by 35.2 percent to 111.01bn RMB billion yuan; manufacturing fell 26.8 percent to 1,026.95bn RMB; and production and distribution of electricity, heat, gas and water fell 24.3 percent to 121.83bn RMB.
The Asian Development Bank has released their predictions for the economic impact of Covid-19. Here’s how the numbers break down.
Comparative economic forecasts
The latest available economic data for the PRC compared to countries in East Asia.
Trade conflict effects
Based on the working paper The Impact of Trade Conflict on Developing Asia, this tool estimates the effects of tariffs on gross domestic product, exports, and employment across Asia and the Pacific countries following the growing trade battle between the United States and People’s Republic of China.
Caixin is reporting that China has suspended debt repayments for 77 developing countries and regions as part of the G-20 debt relief initiative to help impoverished countries weather economic difficulties amid the coronavirus pandemic, a senior Chinese diplomat said on Sunday.
The measures were announced by Chinese Vice Foreign Minister Ma Zhaoxu in Beijing.
Ma offered no details nor beneficiaries, the amount involved or terms of repayment.
The announcement came after G-20 agreed in April to freeze debt service payments until the end of the year for the world’s poorest countries battling Covid-19.
In May, President Xi Jinping also pledged $2 billion in aid and donations over the next two years to relevant countries and organizations combatting the pandemic.
According to the vice foreign minister the pledged aid included a USD50 million donation to the World Health Organization (WHO).
Wang Zhigang, minister of science and technology, also said during the same press conference that China will make its Covid-19 vaccine “a global public good” when it is ready.
China’s top epidemiologist Zhong Nanshan said on Saturday during a livestreaming event that he believed the long-awaited coronavirus vaccine could be available for emergency use as early as this fall or by the end of the year. In total, six candidate vaccines are undergoing clinical trials in China.
