WASHINGTON (Reuters) &#8211; World Bank President David Malpass on Wednesday suggested that Russia’s war in Ukraine and its impact on food and energy prices, as well as the availability of fertilizer, could trigger a global&nbsp;recession.



Malpass told an event hosted by the U.S. Chamber of Commerce that Germany‘s economy, the world’s fourth-largest, has already slowed substantially&nbsp;due to higher energy prices, and said&nbsp;reduced production of&nbsp;fertilizer could worsen conditions elsewhere. 



“As we look at the global GDP … it’s hard right now to see how we avoid a&nbsp;recession,” Malpass said.&nbsp;He gave no specific forecast.



He said the economies of Ukraine and Russia were both expected to see a significant contraction, while Europe, China and the United States were seeing slower growth.



Developing countries were being hit even harder given shortfalls of fertilizer and food stocks and energy supplies, he said.



“The idea of energy prices doubling is enough to trigger a&nbsp;recession&nbsp;by itself,” he said.



In China, he said the relatively sharp slowdown in growth was based on the COVID-19 pandemic, inflation and the pre-existing real estate crisis the country had been facing.



The World Bank last month had already cut its global growth forecast for 2022 by nearly a full percentage point, to 3.2% from 4.1%, due to the impacts from Russia’s invasion of Ukraine.



Malpass gave no details on when a global&nbsp;recession&nbsp;could begin.

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World Bank’s Malpass says war in Ukraine may trigger global recession￼

LONDON, May 19 (Reuters)&nbsp;&#8211;&nbsp;A new study by the&nbsp;central&nbsp;bank&nbsp;to the world&#8217;s&nbsp;central&nbsp;banks, the&nbsp;Bank&nbsp;of International Settlements (BIS), has called for&nbsp;urgent&nbsp;action to tackle&nbsp;rising&nbsp;wealth&nbsp;inequality, warning the problem was feeding a dangerous loop of recessions and poverty.



While government policies have largely been blamed for the rise in&nbsp;inequality&nbsp;since the 1980s,&nbsp;central&nbsp;bankers have also come under fire in recent years for fuelling huge stock market gains with ultra-low interest rates and asset buying schemes.



The&nbsp;BIS, looking at 182 recessions across 70 countries, found that even six years after a downturn, the income share of the bottom 50% of earners in an impacted economy remained 0.3% below the pre-recession level on average, whereas for those in the top 10% bracket it was still 0.7% higher.



Economies that are more unequal go through deeper recessions which in turn further increases&nbsp;inequality, its analysis showed. Less progressive taxes and social support programme in many countries have made the problems worse as well.



&#8220;It is increasingly apparent that&nbsp;inequality&nbsp;has evolved from being an academic issue to an&nbsp;urgent&nbsp;policy&nbsp;matter,&#8221; the&nbsp;<a href="https://www.bis.org/" target="_blank" rel="noreferrer noopener">BIS&nbsp;paper</a>&nbsp;said, adding that one of key risks for&nbsp;central&nbsp;banks was that their policy tools become less effective.



The&nbsp;BIS&nbsp;study showed that low-paid workers in some countries were over three time more likely to have lost their jobs during the COVID-19 pandemic, while surging inflation was&nbsp;now&nbsp;hitting poorer households disproportionately hard.



&#8220;Once&nbsp;inequality&nbsp;is left to grow unchecked, deeper and deeper recessions demand additional policy support,&#8221; it said.



&#8220;But at the same time monetary stimulus loses traction, so that the&nbsp;central&nbsp;bank&nbsp;needs to deploy bolder and bolder instruments, which can in turn produce undesirable side effects in terms of wealth&nbsp;inequality&#8221;.



Instead it recommended keeping inflation in check and that governments use &#8220;stabilisation policies&#8221; such as subsidies or support payments that help poorer people.



(Reporting by Marc Jones; Editing by Jan Harvey)

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Rising inequality now an urgent matter, BIS central bank group warns

KEY POINTS



<ul><li>The euro zone faces concurrent economic shocks from the war in Ukraine and a surge in food and energy prices exacerbated by the conflict, along with a supply shock from China’s zero-Covid policy.</li><li>Stefan Hartung, CEO of German engineering and technology giant Bosch, told CNBC that the company sees “a big recession in the making.”</li></ul>



LONDON — The CEOs of several European blue chip companies have told CNBC that they see a significant recession coming down the pike in Europe.



The continent is particularly vulnerable to the fallout from the Russia-Ukraine war,&nbsp;<a href="https://www.cnbc.com/2022/04/28/europe-faces-recession-if-putin-fully-shuts-off-the-gas-taps.html">associated economic sanctions and energy supply concerns</a>, and economists have been downgrading growth forecasts for the euro zone in recent weeks.



The euro zone faces concurrent economic shocks from the war in Ukraine and a surge in food and energy prices exacerbated by the conflict, along with a supply shock arising from China’s zero-Covid policy. That has prompted concerns about “stagflation” — an environment of low economic growth and high inflation — and eventual recession.



“For sure, we see a big recession in the making, but that’s exactly what we see — it’s in the making. There is still an overhanging demand because of the Covid crisis we just are about to leave,” said Stefan Hartung, CEO of German engineering and technology giant&nbsp;<a href="https://www.cnbc.com/quotes/BOSCHLTD-IN" target="_blank" rel="noreferrer noopener">Bosch</a>.



“It’s still there and you see it heavily hitting us in China, but you see that in a lot of areas in the world, the demand of consumers has already even been increased in some areas.”



In particular, Hartung noted lingering consumer demand for household appliances, power tools and vehicles, but suggested this would dissipate.



“That means for a certain amount of time, this demand will still be there, even while we see the interest increase and we see the pricing increase, but at some point in time, it won’t be just a supply crisis, it will also be a demand crisis, and then for sure, we are in a deep recession,” he added.



Inflation in the euro zone hit a record high of 7.5% in March. So far, the&nbsp;<a href="https://www.cnbc.com/european-central-bank/">European Central Bank</a>&nbsp;has remained more dovish than its peers, such as the Bank of England and the U.S. Federal Reserve, both of which have begun hiking interest rates in a bid to rein in inflation.



However, the ECB now expects to conclude net asset purchases under its APP (asset purchase program) in the third quarter, after which it will have room to begin monetary tightening, depending on the economic outlook.



Berenberg Chief Economist Holger Schmieding said in a note Friday that near-term risks to economic growth are tilted to the downside in Europe.



“Worsening Chinese lockdowns and cautious consumer spending in reaction to high energy and food prices could easily cause a temporary contraction in Eurozone GDP in Q2,” Schmieding said.



“An immediate embargo on gas imports from Russia (highly unlikely) could turn that into a more serious recession. If the Fed gets it badly wrong and catapults the U.S. straight from boom to bust (unlikely but not fully impossible), such a recession could last well into next year.”



Yet Schmieding suggested that the euro zone is likely to enter recession only “if worse came to worst,” and that it isn’t a base expectation.



Mark Branson, president of German financial regulator BaFin, said any military escalation in Ukraine or further energy supply disruption could pose serious risks to growth in Europe’s largest economy, with industrial sectors particularly vulnerable.



“We’re already seeing that growth is down to around zero in many jurisdictions, including here, and it’s vulnerable. It’s also vulnerable from the ongoing Covid-related shocks,” he said.



“We’ve got inflation that’s going to need to be tackled, and it’s going to need to be tackled now, so that’s a cocktail which is difficult for the economy.”



<h3 class="wp-block-heading" id="h-challenging-business-environment">‘Challenging business environment’</h3>



Slawomir Krupa, deputy CEO at&nbsp;<a href="https://www.cnbc.com/quotes/GLE-FR" target="_blank" rel="noreferrer noopener">Societe Generale</a>, told CNBC on Thursday that the French lender is monitoring the macroeconomic picture closely.



“It’s obviously a fundamental piece of news for the macroeconomic context and the triggered inflation feedback loop between the energy shock – which was already going on before the war in Ukraine – you have the inflation expectation rising and the risk of a final, fundamental impact on the macroeconomy into a recession,” he said, adding that this would potentially affect “the entire system, and (SocGen) as well.”



Ola Kallenius, CEO of <a href="https://www.cnbc.com/quotes/MBG-DE" target="_blank" rel="noreferrer noopener">Mercedes-Benz</a>, also told CNBC last week that the situation in China and the Ukraine war are making for a “challenging business environment” for the German luxury automaker in three distinct ways.



“On the one hand, we have the ongoing shortages mainly associated with semiconductors. On top of that, there are now new lockdowns in China, our biggest market, which will affect us in China but also can affect supply chains across the world, and in addition to that, of course, the Ukraine war, so the business environment is challenging,” he explained.



His comments were echoed by&nbsp;<a href="https://www.cnbc.com/quotes/VOW3-DE" target="_blank" rel="noreferrer noopener">Volkswagen</a>&nbsp;CEO Herbert Diess, who told CNBC on Thursday that the company also faced a “challenging environment” from Covid, the chip shortage and the war in Ukraine in the first quarter.



<a href="https://www.cnbc.com/quotes/MAERSK.B-DK" target="_blank" rel="noreferrer noopener">Maersk</a>&nbsp;CEO Soren Skou said Thursday that the world’s largest shipping company is also keeping an eye on recession risks, particularly in the United States, but does not expect those to come to the fore until late 2022 or early 2023.

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‘We see a big recession in the making’: Top CEOs are fearing the worst in Europe

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CFG Advisory says Nigeria is now faced with stagflation, a situation that is more protracted than a recession. They also note that monetary policy has reached its limits and supply side structural reforms and fiscal discipline are now required to get Nigeria out of the stagflation quagmire. CEO of CFG Advisory Tilewa Adebajo and Kayode Akindele, Partner at TIA Capital join CNBC Africa to put this in perspective.

CFG Advisory: Nigeria now faced with stagflation – which is more protracted than a recession

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Nigeria’s economy contracted by 3.62 per cent in the third quarter of the year, according to data by the National Bureau of Statistics. Tilewa Adebajo, CEO of CFG Advisory and Chamberlain Peterside, CEO of Xcellon Capital Advisors join CNBC Africa for more.

Nigeria slips into recession as GDP contracts by 3.62% in Q3 2020

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The World Bank has confirmed the economic downturn in Sub-Saharan Africa, with COVID-19 pushing the region into its first recession in 25 years. With the toll that the pandemic has taken on economic activity, growth is projected to fall to negative 3.3 per cent this year. The heavy blow could also erase at least five years of progress in fighting poverty. Joining CNBC Africa to unpack the latest report from the World Bank is Albert Zeufack, Chief Economist for Africa at the World Bank.

COVID-19 plunges SSA into first recession in 25 years

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The Minister of State for Budget and National Planning, Clement Agba says unless Nigeria posts a strong third-quarter economic performance, it may be headed for a second recession in four years. Ahead of Nigeria’s July inflation data, Bismarck Rewane, CEO of Financial Derivatives joins CNBC Africa to discuss how Nigeria can avert this looming recession.

Financial Derivatives CEO: Here’s how Nigeria can avert a looming recession

Report by Chloe Taylor



Fifty days of strict <a href="https://www.cnbcafrica.com/coronavirus/2020/05/13/covid-19-most-of-sa-to-move-to-level3lockdown-by-end-of-may/">lockdowns</a> followed by 30 days where measures are eased could be an effective strategy for reducing <a href="https://www.cnbcafrica.com/southern-africa/2020/05/19/ipasas-konji-sebati-on-the-global-search-for-the-covid-19-vaccine/">Covid-19</a> deaths while ensuring some level of economic protection, scientists claim.



In an EU-backed study published on Wednesday, a cohort of researchers from nine countries simulated how various <a href="https://www.cnbcafrica.com/east-africa/2020/05/19/covid-19-rwanda-tanzania-agree-on-a-solution-for-cross-border-movements/">lockdown strategies</a> would impact the spread of the coronavirus.



There have been almost 5 million cases of Covid-19 confirmed globally, with over 300,000 deaths from the virus worldwide, according to data compiled by Johns Hopkins University.



Many governments have imposed some form of lockdown to mitigate transmission of the virus. But policymakers around the world are now calculating ways to gradually lift those measures as the pandemic weighs heavily on <a href="https://www.cnbcafrica.com/videos/2020/05/14/covid-19-worsens-zims-economic-challenges/">economic activity</a>.



Scientists suggested in the new report that an alternative, more effective approach to indefinite or milder lockdowns could be alternating stricter measures with intervals of relaxed social distancing. Effective testing, contact tracing and isolation strategies, as well as efforts to shield society’s most vulnerable, would be consistently kept in place.



They modeled several different scenarios on 16 countries, including Australia, Mexico, Belgium, South Africa and Nigeria.



In the first scenario, no mitigation or social-distancing measures were imposed. In every single country, this led to the number of patients requiring treatment in intensive care units (ICUs) quickly and significantly exceeding available capacity. Ultimately, this would result in 7.8 million deaths across the countries included in the analysis, researchers said, and the duration of the epidemic would be almost 200 days in the majority of those nations.



The second scenario modeled a rolling cycle of 50-day “<a href="https://www.cnbcafrica.com/southern-africa/2020/05/12/debunking-covid-19-testing-myths-with-a-medical-doctor/">mitigation measures</a>” followed by a 30-day period where those measures were relaxed. Analysts defined mitigation measures as strategies that gradually reduced the number of new infections, such as social distancing, hygiene rules, isolating individuals with the virus, school closures and restricting large public events. These measures did not include a total lockdown.



This scenario was likely to reduce the R number — the reproduction rate of the virus — to 0.8 in all countries, the study showed. However, while it proved effective for the first three months, after the first relaxation period scientists found the number of patients requiring ICU care would exceed hospital capacities. This would lead to 3.5 million deaths across the 16 countries used in the simulation, with the pandemic lasting around 12 months in high income countries and at least 18 months in other nations.



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Researchers also modeled a third scenario, which involved a rolling cycle of stricter “suppression measures” for 50 days followed by a 30-day relaxation period. Suppression measures were defined as those that led to a faster reduction in the number of new infections, achieved by applying <a href="https://www.cnbcafrica.com/videos/2020/05/14/afcfta-covid-19-as-an-opportunity-to-deepen-intra-africa-trade/">strict lockdown measures</a> on top of other mitigation measures.



In the third, most stringent scenario, the R number would be reduced to 0.5 and keep ICU demand within national capacity across all countries, scientists concluded. As more people would remain susceptible to catching the virus at the end of each cycle, however, the pandemic would be prolonged and last for more than 18 months in all countries.



But the Covid-19 death toll during the pandemic would be significantly reduced in this scenario, with just over 130,000 deaths expected across the 16 countries included the analysis.



Researchers noted that individual countries would need to define for themselves how long the durations of the intervals would last to suit their domestic needs and facilities.



A continuous, three-month strategy of strict <a href="https://www.cnbcafrica.com/videos/2020/05/12/covid-19-cas-coovadia-on-why-govt-should-rethink-its-strategy-on-reopening-the-economy/">suppression measures</a> would be the fastest way to end the pandemic, with most countries able to reduce new cases to near zero in this scenario, scientists said.



Meanwhile, if looser mitigation strategies were continuously applied, it would take just over six months for new cases to fall close to zero.



Rajiv Chowdhury, a global health epidemiologist at the University of Cambridge and the report’s lead author, said the third scenario — rotating strict suppression measures with relaxation periods — may allow populations to “breathe” at intervals.



“That might make this solution more sustainable, especially in resource-poor regions,” he said.



Oscar Franco, director of the Institute of Social and Preventive Medicine at the University of Bern in Switzerland, added that the research provided a strategic option for countries to better control Covid-19.



“There’s no simple answer to the question of which strategy to choose,” he said. “Countries — particularly low-income countries — will have to weigh up the dilemma of preventing Covid-19 related deaths and public health system failure with the long-term economic collapse and hardship.”



The IMF has warned that the world is on course for the deepest <a href="https://www.cnbcafrica.com/coronavirus/2020/05/12/covid-19-kick-starting-sas-small-medium-large-tourism-businesses-join-cnbc-africas-virtual-seminar-tuesday-12th-may-register-today/">recession</a> since the 1930s thanks to the coronavirus pandemic, predicting that the <a href="https://www.cnbcafrica.com/videos/2020/05/13/how-african-economies-will-reawaken-from-the-covid-19-nightmare/">global economy</a> will contract by 3% this year.



This article was first published on CNBC <a href="https://www.cnbc.com/2020/05/19/study-proposes-50-days-on-30-days-off-coronavirus-lockdown-strategy.html">https://www.cnbc.com/2020/05/19/study-proposes-50-days-on-30-days-off-coronavirus-lockdown-strategy.html</a> and is republished with its permission.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Sub-Saharan Africa to suffer 23.1% decline in remittances in 2020 – World Bank

Scientists believe this 50 days on, 30 days off lockdown strategy will help fight COVID-19

By Vuyani Ndaba



JOHANNESBURG (Reuters) &#8211; South Africa’s <a href="https://www.cnbcafrica.com/news/2020/04/15/poor-wealth-forecasts-for-south-africa-due-to-covid-19-sa-wealth-report/">economy will contract sharply this year</a> as activity is hit by the coronavirus outbreak, despite expectations the <a href="https://www.cnbcafrica.com/videos/2020/04/20/why-sarb-should-step-in-to-save-sa-companies-that-are-too-big-to-fail/">central bank</a> will cut interest rates again in May, a Reuters poll found on Monday.



The country is <a href="https://www.cnbcafrica.com/videos/2020/04/20/covid-19-martin-kingston-on-how-to-flatten-sas-recession-curve/">already in recession</a>, with the economy expected to have contracted 1.9% last quarter and to shrink an unprecedented 23% this quarter, the poll showed.



<a href="https://www.cnbcafrica.com/videos/2020/04/14/sarb-cuts-rates-by-100-basis-points-to-record-low/">Another rate cut from the central bank</a> &#8211; which cut 100 basis points from borrowing costs on March 19 and then again on April 14 &#8211; is expected to help the finance ministry, which has already ramped up borrowing.



Economists now expect the economy to shrink 4.9% this year before recovering with 2.0% growth next year. Last month’s survey had suggested 0.3% and 1.2% expansions, respectively.



The forecasts showed huge levels of uncertainty due to a <a href="https://www.cnbcafrica.com/coronavirus/2020/04/09/sa-extends-lockdown-by-two-weeks-until-end-april/">country-wide lockdown</a>. Even the most optimistic <a href="https://www.cnbcafrica.com/videos/2020/04/20/african-billionaire-christo-wiese-on-covid-19-crisis-and-its-impact-on-sas-economy/">economist forecast</a> a contraction of 1.0%, while the most pessimistic predicted a 14.6% contraction.



Base effects may play a role next year, with the most optimistic economist forecasting growth of 5.1%, but some respondents said the lockdown would make it costly and difficult to bring the economy back to normality.



With consumers staying home and global oil prices falling sharply, inflation forecasts were also cut. Prices are now expected to rise 3.8% this year and 4.5% in 2021, compared with 4.2% and 4.6% in a March poll.



That would give the South Africa Reserve Bank room to ease policy.



Nine of 15 economists polled in the past week expected interest rates to be cut by 50 basis points to 3.75% in May, while three said the Bank would cut by 25 basis points. Two expected no move, and one pencilled in a 100 basis-point cut.



“Given the scale of the SARB’s forecast revisions and that of its surprise rate cut, there is little doubt now that its hawkish reservations to cut rates have been lifted,” said Francesca Beausang, economist at Continuum Economics.



On April 14 the central bank slashed its repo rate by 100 basis points to 4.25% in an unscheduled meeting, similar to the U.S. Federal Reserve’s emergency cuts last month, to mitigate the impact of the coronavirus.



“It seems as though it is keen to cut more than any emerging markets bank to make up for its previous reservations,” Beausang added.



Meanwhile, the balance sheet of the South African Reserve Bank looks more healthy and counter-cyclical in dealing with exogenous shocks than that of the National Treasury.



Economists answering an extra question said South Africa asking for an <a href="https://www.cnbcafrica.com/news/2020/04/14/imf-approves-immediate-debt-relief-for-25-countries-amid-covid-19-crisis/">International Monetary Fund</a> rapid financing facility without conditions or the SARB increasing its purchase of bonds on the secondary market would be most effective in mitigating the country’s funding crisis during the lockdown.



Other measures favoured included the SARB issuing coronavirus or disaster bonds targeted exclusively for the lockdown period or issuing more shorter-maturity bonds.



Capital Economics said the chances of South Africa turning to the IMF were rising.



“Finance Minister Tito Mboweni ruled out the possibility of any multilateral support that comes with conditions. But the IMF’s Rapid Financing Instrument (RFI) or its new Short-Term Liquidity Line might fit the bill,” it said in a note.



The RFI provides rapid and low-access financial assistance to member countries facing an urgent balance of payments requirement, without the need to have a fully fledged programme in place.



Mboweni ruled out an IMF adjustment programme last week and said the country didn’t need budget support, despite acknowledging that there would be a deep recession this year because of the global COVID-19 pandemic.



Asking multilateral institutions, especially the IMF, for cash is deeply unpopular with a faction in the governing African National Congress and trade unions that the party uses to rally support before elections. The ANC and two allies warned Mboweni earlier this month against seeking IMF assistance.



(Additional polling by Khushboo Mittal in Bengaluru; Editing by Jonathan Cable and Hugh Lawson)



This article was first published on Reuters Africa <a href="https://af.reuters.com/article/investingNews/idAFKBN2221Z2-OZABS">https://af.reuters.com/article/investingNews/idAFKBN2221Z2-OZABS</a> and is republished with its permission.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

South African economy to shrink 4.9% in 2020, SARB to cut rates in May – Poll

Growth in Sub-Saharan Africa has been <a href="https://www.cnbcafrica.com/east-africa/2020/04/08/how-african-economies-can-survive-the-covid-19-crisis/">significantly impacted by the COVID-19 pandemic</a> and is forecast to fall from 2.4% in 2019 to -2.1% to -5.1% in 2020, the first recession in the region over the past 25 years, according to the World Bank’s latest Africa’s Pulse report.



The report goes on to suggest that economies in Sub-Saharan Africa could lose between $37 billion and $79 billion in output losses in 2020 due to COVID-19.



The following is a statement by the World Bank regarding its latest Africa’s Pulse report:



<h4 class="wp-block-heading">PRESS RELEASE April 9, 2020</h4>



<h4 class="wp-block-heading">COVID-19 (Coronavirus) Drives Sub-Saharan Africa Toward First Recession in 25 Years</h4>



WASHINGTON, April 9, 2020—Growth in Sub-Saharan Africa has been significantly impacted by the ongoing coronavirus outbreak and is forecast to fall sharply from 2.4% in 2019 to -2.1 to -5.1% in 2020, the first recession in the region over the past 25 years, according to the latest Africa’s Pulse, the World Bank’s twice-yearly economic update for the region.



“The COVID-19 pandemic is testing the limits of societies and economies across the world, and African countries are likely to be hit particularly hard,” said Hafez Ghanem, World Bank Vice President for Africa. “We are rallying all possible resources to help countries meet people’s immediate health and survival needs while also safeguarding livelihoods and jobs in the longer term – including calling for a standstill on official bilateral debt service payments which would free up funds for strengthening health systems to deal with COVID 19 and save lives, social safety nets to save livelihoods and help workers who lose jobs, support to small and medium enterprises, and food security.”



The Pulse authors recommend that African policymakers focus on saving lives and protecting livelihoods by focusing on strengthening health systems and taking quick actions to minimize disruptions in food supply chains. They also recommend implementing social protection programs, including cash transfers, food distribution and fee waivers, to support citizens, especially those working in the informal sector.



The analysis shows that COVID-19 will cost the region between $37 billion and $79 billion in output losses for 2020 due to a combination of effects. They include trade and value chain disruption, which impacts commodity exporters and countries with strong value chain participation; reduced foreign financing flows from remittances, tourism, foreign direct investment, foreign aid, combined with capital flight; and through direct impacts on health systems, and disruptions caused by containment measures and the public response.



While most countries in the region have been affected to different degrees by the pandemic, real gross domestic product growth is projected to fall sharply particularly in the region’s three largest economies – Nigeria, Angola, and South Africa— as a result of persistently weak growth and investment. In general, oil exporting-countries will also be hard-hit; while growth is also expected to weaken substantially in the two fastest growing areas—the West African Economic and Monetary Union and the East African Community—due to weak external demand, disruptions to supply chains and domestic production. The region’s tourism sector is expected to contract sharply due to severe disruption to travel.



The COVID-19 crisis also has the potential to spark a food security crisis in Africa, with agricultural production potentially contracting between 2.6% in an optimistic scenario and up to 7% if there are trade blockages. Food imports would decline substantially (as much as 25% or as little as 13%) due to a combination of higher transaction costs and reduced domestic demand.



Several African countries have reacted quickly and decisively to curb the potential influx and spread of the coronavirus, very much in line with international guidelines. However, the report points out several factors that pose challenges to the containment and mitigation measures, in particular the large and densely populated urban informal settlements, poor access to safe water and sanitation facilities, and fragile health systems. Ultimately, the magnitude of the impact will depend on the public’s reaction within respective countries, the spread of the disease, and the policy response. And these factors together could lead to reduced labor market participation, capital underutilization, lower human capital accumulation, and long-term productivity effects.



“In addition to containment measures, we have seen that in responding to COVID-19, countries are opting for a combination of emergency fiscal and monetary policy actions with many central banks in the region taking important actions like cutting interest rates and providing extraordinary liquidity assistance,” said Albert Zeufack, Chief Economist for Africa at the World Bank. “However, it is important to ensure that fiscal policy builds in space for social protection interventions, especially targeting workers in the informal sector, and sows the seed for future resilience of our economies.”



The authors emphasize the need for a customized policy response to reflect the structure of African economies (especially the large informal sector) and the peculiar constraints policymakers currently face, particularly the deteriorating fiscal positions and heightened public debt vulnerabilities, and the overall low operational capacity to respond.



“The immediate measures are important but there is no doubt there will be need for some sort of debt relief from bilateral creditors to secure the resources urgently needed to fight COVID-19 and to help manage or maintain macroeconomic stability in the region,” said Cesar Calderon, Lead Economist and Lead author of the report.



Due to the COVID-19 pandemic, economic circumstances within countries and regions are fluid and change on a day-by-day basis. The macroeconomic analysis in the report is based on data available by the first quarter of March 2020.



The World Bank Group is taking <a href="https://www.worldbank.org/en/who-we-are/news/coronavirus-covid19">broad, fast action</a> to help developing countries strengthen their pandemic response, increase disease surveillance, improve public health interventions, and help the private sector continue to operate and sustain jobs. It is deploying up to $160 billion in financial support over the next 15 months to help countries protect the poor and vulnerable, support businesses, and bolster economic recovery.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Africans singled out in southern China sparks diplomatic backlash

COVID-19 drives Sub-Saharan Africa toward first recession in 25 years – World Bank report

A group of 165 past and present global leaders have come together to demand the creation of a G20 executive task force and an immediate global pledging conference to approve and co-ordinate a multi-billion dollar fund to fight against the COVID-19 pandemic.



The following statement was issued by the Office of Gordon and Sarah Brown:



Media release



UNDER STRICT EMBARGO until Tuesday, April 7, 00.01 BST



GLOBAL LEADERS ISSUE G20 CALL TO ACTION URGING IMMEDIATE PLEDGING CONFERENCE AND TASK FORCE TO CO-ORDINATE WORLD RESPONSE TO COVID-19



 165 past and present leaders say to G20: approve now $8bn emergency global health funding to prevent second wave of coronavirus



<ul><li>Debt interest payments of poorest countries should be waived now; global fiscal co-ordination essential to avoid recession becoming depression</li></ul>



<ul><li>Warning that without rapid support, 1.2 million covid-19 deaths are possible in Africa and Asia’s poorest countries amid danger of igniting second round of disease in rest of the world</li></ul>



<ul><li>Race for vaccine, cure, test kits, ventilators and protective equipment for health workers &#8211; open letter says &#8211; demands enhanced co-operation and concerted global push to increase capacity</li></ul>



A 165-strong international group including 92 former Presidents and Prime Ministers, along with current economic and health leaders in the developed and developing world have come together to demand the creation of a G20 executive task force and an immediate global pledging conference which would approve and co-ordinate a multi-billion dollar coronavirus fighting fund.



In an open letter addressed to G20 leaders the group &#8211; which wants both to speed up the search for a vaccine, cure and treatments and revive the global economy &#8211; urges global collaboration and commitment to funding ‘far beyond the current capacity of our existing international institutions’.



“The economic emergency will not be resolved until the health emergency is addressed: the health emergency will not end simply by conquering the disease in one country alone but by ensuring recovery from COVID-19 in all countries,” the statement says.



The plea is for agreement within days for:



<ul><li>$8 billion to rapidly hasten the global effort for vaccines, cure and treatment;</li></ul>



<ul><li>$35 billion to support health systems, from ventilators to test kits and protective equipment for health workers;</li></ul>



<ul><li>And $150 billion for developing countries to fight the medical and economic crisis, prevent a second wave of the disease flowing back into countries as they come out of the first wave. This means waiving debt interest payments for the poorest countries, including $44billion due this year from Africa. A $500-$600billion issue of additional resources by the IMF in the form of special drawing rights is proposed.”</li></ul>



The letter also urges the co-ordination of fiscal stimuli to avoid a recession becoming a depression.



While welcoming the G20’s first communique on the Covid-19 crisis, the 165-strong group are pressing the G20 to speed up an action plan.



The group states: &#8220;All health systems – even the most sophisticated and best funded – are buckling under the pressures of the virus. Yet if we do nothing as the disease spreads in poorer African, Asian and Latin American cities which have little testing equipment, hardly any ventilators, and few medical supplies; and where social distancing and even washing hands are difficult to achieve, Covid-19 will persist there – and re-emerge to hit the rest of the world with further rounds that will prolong the crisis.



&#8220;World leaders must immediately agree to commit $8 billion – as set out by the Global Preparedness Monitoring Board – to fill the most urgent gaps in the COVID-19 response. This includes $1billion this year for WHO, $3 billion for vaccines and $2.25 billion for therapeutics.



&#8220;Instead of each country, or state or province within it, competing for a share of the existing capacity, with the risk of rapidly-increasing prices, we should also be vastly increasing capacity by supporting the WHO in coordinating the global production and procurement of medical supplies, such as testing kits, personal protection equipment, and ITU technology to meet fully the worldwide demand. We will also need to stockpile and distribute essential equipment.



“$35 billion will be required, as highlighted by WHO, to support countries with weaker health systems and especially vulnerable populations, including the provision of vital medical supplies, surge support to the national health workforce (70% of whom in many countries are underpaid women) and strengthening national resilience and preparedness.



“According to WHO, almost 30% of countries have no COVID-19 national preparedness response plans and only half have a national infection prevention and control program. Health systems in lower income countries will struggle to cope; even the most optimistic estimates from Imperial College London suggest there will be 900,000 deaths in Asia and 300,000 in Africa.



&#8220;We propose convening a global pledging conference – its purpose supported by a G20 Executive Task Force &#8211; to commit resources to meeting these emergency global health needs.”



On the Global Economic outlook, the group propose a range of measures and state:



&#8220;Much has been done by national governments to counter the downward slide of their economies. But a global economic problem requires a global economic response. Our aim should be to prevent a liquidity crisis turning into a solvency crisis, and a global recession becoming a global depression. To ensure this, better coordinated fiscal, monetary, central bank, and anti-protectionist initiatives are needed. The ambitious fiscal stimuli of some countries will be all-the-more effective if more strongly complemented by all countries in a position to do so.



“The long term solution is a radical rethink of global public health and a refashioning – together with proper resourcing – of the entwined global health and financial architecture.



“The UN, the G20 and interested partners should work together to co-ordinate further action.”



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Clarification on COVID-19 “hotspots” as SA moves to level 3 lockdown

Global leaders issue G20 call to action to co-ordinate world response to COVID-19

JOHANNESBURG (Reuters) &#8211; Moody’s will cut South Africa’s sovereign credit rating later on Friday as a recession deepened by the impact of coronavirus frustrates economic reform efforts aimed at reducing government debt, a Reuters poll of economists found.



Taken in the last three days, the survey showed 12 of 18 respondents saying Moody’s, the only major credit rating agency that still rates South Africa’s bonds as investment-grade, will cut them to “junk” status. Standard &amp; Poor’s and Fitch both cut their ratings to junk nearly three years ago. 



Eleven economists who answered an extra question said the rating was “still relevant” despite a punishing market sell-off that has overshadowed the long-awaited decision, while five said it was “important”. Only two said whether or not Moody’s downgrades the bonds to junk was “irrelevant.” 



“It may not be a market-moving event at this juncture but is important going forward as sub-investment grade from all three rating agencies will undoubtedly raise the cost of capital or funding in South Africa,” said economist Hugo Pienaar at the Bureau for Economic Research. 



The rand, stocks and bonds have been under intense pressure as the pandemic hits asset prices. But many analysts say South African assets have been trading as though they are junk-rated for at least a couple of years already. 



“In our view, the Moody’s downgrade itself has for some time been discounted by financial markets, though it remains uncertain exactly what impact the subsequent World Government Bond Index (WGBI) expulsion will have,” said Elna Moolman, economist at Standard Bank. 



“Guided by global examples in this regard, it is possible that the bulk of the repricing has already occurred.” 



With the virus still spreading, in a worst-case scenario, median forecasts showed South Africa’s economy would shrink by 4% in Q1, 8% in Q2 and 5% in 2020 as a whole, according to the median forecasts from answers to an additional question. 



The last Reuters poll prior to the announcement of the 21-day lockdown for South Africa that started on Thursday evening predicted the economy would shrink 0.4% in Q1, then grow 0.9% in Q2 and 0.3% for the year as whole. 



“As the country enters a minimum of a three-week lockdown period it means domestic fiscal metrics are likely to get significantly worse this year, with sovereign debt ratios now almost certain to rise,” said Jeffrey Schultz, economist at BNP Paribas.



South African assets recovered on Wednesday after the central bank launched a bond-buying programme, seeking to drum up demand in credit markets as the coronavirus epidemic weighs on the ailing economy. 



Christopher Shiells at Informa Global Markets said a downgrade to junk status would probably be seen as a relief by the government as it would free it up to make a significant fiscal response to the crisis. 



“Rating agencies are expected to downgrade a number of sovereigns due to the coronavirus. Outflows and asset weakness have been occurring over last month, so the worst has already happened in that sense,” he said. 



(Editing by Ross Finley and Catherine Evans)



This article was first published on Reuters Africa <a href="https://af.reuters.com/article/investingNews/idAFKBN21E150-OZABS">https://af.reuters.com/article/investingNews/idAFKBN21E150-OZABS</a> and is republished with its permission.



For more coverage on COVID-19 visit: <a href="https://www.cnbcafrica.com/covid-19/">https://www.cnbcafrica.com/covid-19/</a>

Moody’s to cut South Africa’s sovereign credit rating to junk – economists

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The rand weakened on the back of news that South Africa has slipped into a technical recession. According to Stats SA, the country&#8217;s GDP has contracted by 1.4 per cent in the fourth quarter of 2019. However, according to Citadel South Africa has been in recession since 2013 in terms of per capita growth, owing to the country’s inability to achieve growth of above 1 per cent or at levels above our population growth, which is currently 1.4 per cent. Joining CNBC Africa to discuss what this means for South Africa is Daniel Silke, Political Economy Analyst and Duma Gqubule, Director for the Centre for Economic Development and Transformation.

How to end SA’s recession

PRETORIA, March 3 (Reuters) &#8211; South Africa entered its second recession in two years in the final quarter of last year, as agriculture, transport and construction contracted, data showed on Tuesday.



Statistics South Africa (Stats SA) said the economy shrank 1.4% in the fourth quarter, following a revised 0.8% contraction in the third quarter.



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Economists polled by Reuters had predicted a contraction of 0.1% in quarter-on-quarter and seasonally adjusted terms.


		
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&#8220;The economy is in recession again. That is two consecutive quarters of contraction, after being in recession in the first two quarters of 2018,&#8221; Joe de Beer, Stats SA&#8217;s deputy director-general for economic statistics, told reporters.



On a quarter-on-quarter basis, agriculture declined 7.6%, transport 7.2%, construction 5.9%, electricity 4% and retail 3.8%, the data showed.



Gross domestic product overall shrank 0.5% year-on-year in the fourth quarter after expanding 0.1% the quarter before. The economy expanded 0.2% in the 2019 calendar year compared with 0.8% in 2018.



South Africa has struggled to emerge from an economic slump in the two years since Cyril Ramaphosa became president, promising sweeping reforms.



The Treasury has cut 2020 economic growth forecast to 0.9%. 



(Reporting by Mfuneko Toyana and Tumelo Modiba; writing by Olivia Kumwenda-Mtambo; editing by Larry King)

South African economy enters recession, what you need to know

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Oil Prices steadied today following a sharp dip from recession concerns. Brent currently trades down 13 cents to 59 dollars 35 cents. To discuss this and other stories making the rounds, Winston Osuchukwu, Co-founder of Trans-Sahara Incorporated joins CNBC Africa for more.

U.S 30-year treasury yield hit record low, backs fears of global recession

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George Herman, Director and CIO at Citadel spoke to CNBC Africa’s Fifi Peters about the potential for US yield curve to invert in 2019, recession fears and the implications for South Africa.

Potential US yield curve in 2019 shows looming recession

PRETORIA (Reuters) &#8211; South Africa’s economy expanded 2.2 percent in the third quarter in quarter-on-quarter terms, snapping out of recession after a revised 0.4 percent contraction in the second quarter, data from Statistics South Africa showed on Tuesday.
Economists polled by Reuters had predicted a 1.6 expansion for the third quarter.
The data also showed economic output rose 0.5 percent on an unadjusted year-on-year basis in the third quarter, in-line analysts’ predictions.
Reporting by Olivia Kumwenda-Mtambo; Editing by James Macharia

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World Bank’s Malpass says war in Ukraine may trigger global recession￼

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World Bank’s Malpass says war in Ukraine may trigger global recession