Living with COVID-19: Four Futures and Five Settings Remarks

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Living with COVID-19: Four Futures, Five Settings Remarks at the Bank of Albania/London School of Economics Annual Conference October 29, 2020

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Highly uncertain outlook for global economy Radical uncertainty, but most likely an uneven and fragile recovery, with COVID-19 casting a long shadow, particularly over much of the emerging and developing world (even with an effective vaccine) Upside scenario would be a synchronous recovery in 2021, supported by policy measures (monetary and fiscal) and constructive policies from next US administration Downside scenario would be growth disappointment, and a more widespread level of sovereign distress, with financial market disruptions

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Growth likely to disappoint, almost everywhere Change from October 2019 WEO 2020 Change from April 2020 WEO 2020 October 2020 WEO Projections 2021 2020 2021 2021 Emerging Markets and Developing Economies -3.3 6.0 GDP Growth -2.2 -0.6 -7.8 1.3 Inflation 5.0 4.7 0.3 0.2 0.2 0.1 -10.4 -8.8 Fiscal Balance* -1.5 -1.6 -5.5 -4.0 Current Account* -0.1 -0.4 0.8 0.1 0.2 0.1 Advanced Economies -5.8 3.9 GDP Growth 0.3 -0.6 -7.5 2.3 Inflation 0.8 1.6 0.3 0.1 -1.0 -0.2 -14.2 -6.8 Fiscal Balance* -3.7 -1.4 -11.4 -4.1 Current Account* 0.5 0.6 0.4 0.4 0.0 0.1 Note: * % of GDP Data Source: IMF World Economic Outlook, October 2020, April 2020, October 2019

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Taking stock of where we are Radical uncertainty medical emergency, economic, social, (geo)political impacts COVID-19 casting a long shadow particularly in emerging and developing world, with decades of growth lost, with increasing inequality and social tension Some countries in East Asia shown the most effective way out of the pandemic, but most other economies are struggling with the costs of lockdowns Exports recovered and global value chains restored, but geopolitics poses threat Fiscal space radically diminished and financial stability is at risk Supportive monetary and, in some places, fiscal stimulus help, but how sustainable?

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Four Futures (based on science) (Bedford et al, Pre-Print, The Lancet) Antivirals No anti-virals Vaccines Future 3: Medical interventions effective, evolution works for us Future 1: Vaccines work, anti-virals fail No vaccines Future 2: Antivirals work, vaccines fail Future 4: Medical interventions ineffective, evolution works against us

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Five settings (based on social science) High-income Middle-income Low-income Conflict zones Specific environments, such as prisons and refugee camps

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Six findings In all four scenarios virus is not globally eradicated, become endemic All areas vulnerable to new infections when outbreaks somewhere Global real-time surveillance and international collaboration critical Vaccines of crucial importance prioritisation of distribution difficult Important obstacles to fair distribution + resistance to immunisation Without vaccines and anti-virals, ability to deliver PPI s crucial

*OFFICIAL USE ONLY *OFFICIAL USE ONLY Implications Largest global shock since WWII - all economies have been affected many impacted more by indirect economic, social and political impacts Most emerging and developing economies implemented stricter public health measures than advanced economies strong popular support but very hard to sustain In countries with multiple fragilities, governments lack the ability to respond both to the medical emergency and its economic impact Scarring of economies, but also societies and polities, undermining trust in governments at different levels and across countries, and ultimately the multilateral system