Economics of global warming

Alternative scenarios for the impact of the COVID-19 pandemic on economic activity in the euro area

Retrieved on: 
Saturday, May 2, 2020
Economy of the European Union, Eurozone, Systems thinking, Economy, Design, Risk analysis, Scenario analysis, Euro, Currency, Continents, Economics of global warming

Prepared by Niccol Battistini and Grigor Stoevsky The outbreak of the COVID-19 pandemic has dramatically affected global economic activity since early 2020.

Key Points: 
  • Prepared by Niccol Battistini and Grigor Stoevsky The outbreak of the COVID-19 pandemic has dramatically affected global economic activity since early 2020.
  • Nevertheless, there could still be a prolonged period of social distancing and other containment measures in force for some time.
  • Despite the shortage of timely hard data, it is already clear that there has been a decline in economic activity of an unprecedented magnitude.
  • The high uncertainty surrounding the economic impact of the COVID-19 pandemic warrants an analysis based on alternative scenarios.
  • These uncertainties can be illustrated through a scenario analysis, based on broad narratives for the aforementioned factors and their economic impact.
  • This box presents three alternative scenarios to illustrate the range of likely impacts of the COVID-19 pandemic on the euro area economy.
  • The different assumptions underlying the three illustrative alternative scenarios imply a range spanning from mild to severe expected economic impact.
  • Containment measures during the lockdown periods have a diverse impact across economic sectors in the euro area.
  • Strict containment measures are expected to severely affect economic activity in the euro area well beyond the short-term horizon.
  • The sectoral approach used to assess the economic losses associated with the COVID-19 pandemic allows for the calculation of a time profile of indicative losses (as a percentage of maximum sectoral losses) implied by the virus containment measures in the euro area under the three alternative scenarios (see Chart A).
  • Chart A Time profile of indicative losses in gross value added implied by containment measures in the euro area under the mild, medium and severe scenarios (percentage of maximum euro area sectoral loss)
  • Similarly to the euro area, three illustrative scenarios are also considered for global real GDP excluding the euro area and euro area implied foreign demand of goods and services (see Chart B).
  • As a result of the high procyclicality of global trade with respect to global activity, euro area foreign demand would fall by around 7%, 11% and 19% under the mild, medium and severe scenarios, respectively, in 2020.
  • Chart B Euro area foreign demand under the mild, medium and severe scenarios (index, 2019 Q4 = 100)
  • Euro area real GDP is expected to drop sharply in the short term, while effective containment measures would be crucial to ensuring a robust recovery thereafter.
  • The scenario analysis used in this box points towards an unprecedented contraction in economic activity, with real GDP plummeting by around 5%, 8% and 12% under the mild, medium and severe scenarios, respectively, in 2020 (see Chart C).
  • As containment measures allow for a gradual normalisation of economic activity, real GDP is expected to increase by around 6%, 5% and 4% under the mild, medium and severe scenarios, respectively, in 2021.
  • Chart C Euro area real GDP under the mild, medium and severe scenarios (index, 2019 Q4 = 100)
  • These illustrative scenarios abstract from a number of other relevant factors that would also influence the magnitude of the recession in the euro area.
  • The scenarios are built on the assumed containment by economic policy measures of prospective negative real-financial feedback loops.
  • Finally, the three scenarios take into account the fiscal measures that have recently been announced by euro area countries.

Christine Lagarde: Remarks on the occasion of receiving the Grand Prix de l’Économie 2019 from Les Echos

Retrieved on: 
Thursday, February 6, 2020
Articles, Physical geography, Eurozone, Climate change policy, Climate change, Climatology, Economics of global warming, Global warming, Euro

SPEECHRemarks on the occasion of receiving the Grand Prix de l’Économie 2019 from Les EchosSpeech by Christine Lagarde, President of the ECB, at the "Grand Prix de l’Économie des Echos pour l’année 2019"In particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity:the goal to build real “European autonomy”;and the aim to urgently fight the consequences of climate change.The environment facing European business today is characterised by both uncertainty in the short term and a changing landscape in the longer term.

Key Points: 


SPEECH

Remarks on the occasion of receiving the Grand Prix de l’Économie 2019 from Les Echos

    Speech by Christine Lagarde, President of the ECB, at the "Grand Prix de l’Économie des Echos pour l’année 2019"

    • In particular, two big ambitions are pervading many aspects of policymaking in ways that create change, but also opportunity:
      • the goal to build real “European autonomy”;
      • and the aim to urgently fight the consequences of climate change.
      • The environment facing European business today is characterised by both uncertainty in the short term and a changing landscape in the longer term.
      • The short-term uncertainties are mainly related to global risks trade, geopolitical and now the outbreak of the coronavirus and its potential effect on global growth.
      • And, though GDP growth in the last quarter was weak, it was broadly in line with our expectations.
      • So were continuing to monitor closely how these risks develop and how they feed into our central scenario for the economy.
      • I know that, as business leaders, you naturally seek the new opportunities that emerge for your companies in such times.

    European autonomy

      • So its no surprise that the ambition of building European autonomy is gaining traction and has been gathering momentum in various policy areas.
      • Where this overlaps most with the ECB is the international role of the euro.
      • It strengthens monetary policy autonomy.
      • [1] Of course, autonomy should be seen not as an alternative but as a robust complement to global cooperation, which is of utmost importance.
      • But in Europes case, while the international use of the euro has stabilised in recent years, it still lags some way behind the dollar, even for European trade.
      • So, European policymakers are showing renewed interest in strengthening the euros global role and this coincides with the ECBs tasks.
      • And here the ECB can contribute, in particular by providing safe and innovative market infrastructures under European jurisdiction, and by acting as an accelerator in payments solutions.
      • As forthcoming analysis from the European Systemic Risk Board shows, there are plausible channels through which a cyber attack could morph into a serious financial crisis.
      • So the ECB is well aware that it has a duty to be prepared and to act pre-emptively.

    Climate change

      • The second big ambition reshaping the landscape for business is the mission to fight the consequences of climate change.
      • In keeping with this, climate change will be a key part of our ongoing strategy review.
      • We need to extend our knowledge about the macroeconomic effects of climate change, in particular in key areas like inflation, productivity and trade.
      • A recent study found that, out of approximately 77,000 articles published in top economics journals, less than 60 have been on climate change.
      • What we do know so far suggests that climate change will affect monetary policy.
      • In other words, bringing climate change more fundamentally into our analysis and strategy is not mission creep: climate change is also a price stability risk.
      • These include physical risks from natural disasters and climate change, and they include risks from a disorderly climate transition.

    Conclusion

    Government of Canada supports climate action by Vivre en Ville

    Retrieved on: 
    Thursday, September 5, 2019
    Climate change policy, Climate change, Animal ecology, Climate change adaptation, Global warming, Plant ecology, Politics of climate change, Climate and Development Knowledge Network, Economics of global warming

    Today, the Minister of Environment and Climate Change, Catherine McKenna, announced up to $145,000 in funding through the Climate Action Fund to Vivre en Ville for its project Building with Climate Change.

    Key Points: 
    • Today, the Minister of Environment and Climate Change, Catherine McKenna, announced up to $145,000 in funding through the Climate Action Fund to Vivre en Ville for its project Building with Climate Change.
    • Vivre en Ville will help small and medium-sized developers adopt good practices in emissions reduction and climate change adaptation and implement sustainable building projects.
    • Funded projects will raise awareness of climate change and clean growth and encourage others to take action in support of Canada's climate goals.
    • The Climate Action Fund supports initiatives that help bring new ideas and innovations to help tackle climate change and encourage climate action.