The economic crisis induced by the Covid19 pandemic stands out in term of its global scale scope and severity In 2020 95 percent of all countries experienced negative output growth More than in the Great Depression or both World Wars ID: 1006484
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1. The Covid-19 crisis in historical perspectiveThe economic crisis induced by the Covid-19 pandemic stands out in term of its global scale, scope, and severityIn 2020, 95 percent of all countries experienced negative output growth. More than in the Great Depression or both World WarsThe crisis is unique in its nature: unlike previous crises, it did not originate as a crisis in the government or financial sector. Self-induced supply shock that affects households and firmsPoverty increased for the first time in a generation, generating 100 million new poor in 2020Impacts of the crisis highly regressive within and between countries1 1st Annual Central Bank Conference on Development Economics in the Middle East and North Africa Board MeetingDecember 2, 2021
2. WDR22 Conceptual Framework2World Development Report 2022: Finance for an Equitable Recovery
3. WDR22 Conceptual Framework3World Development Report 2022: Finance for an Equitable Recovery
4. WDR22 Conceptual Framework4World Development Report 2022: Finance for an Equitable Recovery
5. WDR22 Conceptual Framework5World Development Report 2022: Finance for an Equitable Recovery
6. Policy Area 1: Resolving loan distressRisk: High ratio of non-performing loans impair credit intermediation; Delayed action increases costs and compromises the capacity of banks to finance the recovery6World Development Report 2022: Finance for an Equitable Recovery
7. Policy Area 1: Resolving loan distressRisk: High ratio of non-performing loans impair credit intermediation; Delayed action increases costs and compromises the capacity of banks to finance the recoveryPolicy Area 2: Restructuring firm and household debtRisk: High NPL rates that lead to widespread debt distress, “zombie firms”, mass bankruptcy filings, and government interference in debt resolution; Delayed action can cut off access to credit, destroy jobs, and discourage entrepreneurship7World Development Report 2022: Finance for an Equitable Recovery
8. Policy Area 1: Resolving loan distressRisk: High ratio of non-performing loans impair credit intermediation; Delayed action increases costs and compromises the capacity of banks to finance the recoveryPolicy Area 2: Restructuring firm and household debtRisk: High NPL rates that lead to widespread debt distress, “zombie firms”, mass bankruptcy filings, government interference in debt resolution; Delayed action can cut off access to credit, destroy jobs, and discourage entrepreneurshipPolicy Area 3: Ensuring continued access to financeRisk: Lenders stop issuing credit – especially for perceived higher-risk groups – because traditional ways to measure risk and establish recourse in the event of default are less effective8World Development Report 2022: Finance for an Equitable Recovery
9. Spotlights: Focus on inclusive and sustainable financeFinancial inclusion and financial resilienceStrengthening the regulation and supervision of microfinanceSupporting MSMEs and informal businesses through recovery requires concerted efforts to support MFIsPublic credit guarantees to support MSME’s, designed to mitigate the risks of moral hazard, politicizationGreening of capital markets: Issuance of sovereign sustainable bonds9World Development Report 2022: Finance for an Equitable Recovery
10. Spotlights: Focus on inclusive and sustainable financeFinancial inclusion and financial resilienceStrengthening the regulation and supervision of microfinanceSupporting MSMEs and informal businesses through recovery requires concerted efforts to support MFIsPublic credit guarantees to support MSME’s, designed to mitigate the risks of moral hazard, politicizationGreening of capital markets: Issuance of sovereign sustainable bonds10World Development Report 2022: Finance for an Equitable Recovery
11. Policy Area 1: Resolving loan distressRisk: High ratio of non-performing loans impair credit intermediation; Delayed action increases costs and compromises the capacity of banks to finance the recoveryPolicy Area 2: Restructuring firm and household debtRisk: High NPL rates that lead to widespread debt distress, “zombie firms”, mass bankruptcy filings, government interference in debt resolution; Delayed action can cut off access to credit, destroy jobs, and discourage entrepreneurshipPolicy Area 3: Ensuring continued access to financeRisk: Lenders stop issuing credit – especially for perceived higher-risk groups – because traditional ways to measure risk and establish recourse in the event of default are less effectivePolicy Area 4: Managing high levels of sovereign debtRisk: Delays in addressing elevated sovereign debt are associated with protracted recessions and high inflation, which have disproportionate negative effects on the poor11World Development Report 2022: Finance for an Equitable Recovery
12. Thank you.Further questions or comments are welcome - please email lklapper@worldbank.org 12