31.New Coronavirus Pandemic ― Great Lockdown vs. Great Recession
The United Nations Food and Agriculture Organization (FAO) has published a report entitled "Comparing Crises: Great Lockdown versus Great Recession" (Schmidhuber and Qiao 2020). The Great Recession refers to the global economic crisis during the late 2000s and early 2010s and has been so far considered the worst recession since World War II. On the other hand, the Great Lockdown is associated with COVID-19 and is expected to lead to much deeper recessions at both the country and global level.
The differences between the two crises are summarized in the report as follows (short version):
1. The Great Lockdown will result in GDP contractions considerably deeper than those of the Great Recession.
2. Low-income countries saw little change in their GDP growth rates during the Great Recession, which mainly resulted in negative growth rates in high-income countries. While under the Great Lockdown, low income countries will also see sharp declines in GDP.
3. Particularly hard hit will be emerging markets in Europe and Latin America, all of which are heavily dependent on commodity exports, including agricultural exports.
4. Hardest hit of all will be island states, particularly the SIDS.
5. The world in 2020 is more experienced in dealing with global crises and arguably also better prepared. In high income countries, central banks are now fully familiar with the instruments of monetary easing. However, the large accumulation of debts in low income countries could spark a credit crunch and result in debt defaults.
6. The initial conditions for world agriculture are more supportive to avoiding a global food crisis.
7. While global markets appear to be well supplied and resilient to further shocks, local problems could loom large. Particularly exposed are the SIDS.
8. In low- and high-income countries alike, all forms of labour-intensive agriculture are particularly exposed to the impacts of COVID-19.
9. Where COVID-19 emerges amid other crises such a pest and disease outbreaks (locust, African swine fever), adverse weather conditions, or compromised security (civil strife), the impacts on local food security can rise significantly.
10. At the level of international food markets, avoiding supply and export restrictions is of key importance.
Schmidhuber, J. And Qiao, B. 2020. Comparing crises: Great Lockdown versus Great Recession. Rome, FAO. https://doi.org/10.4060/ca8833en
Contributor: IIYAMA Miyuki (Research Strategy Office)
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