The epidemic situation has a great impact on the global economic operation. First of all, countries have taken measures such as closing cities, stopping work and isolating, basically stopping economic activities other than production and daily necessities, and the economy has stagnated. Secondly, international trade has shrunk severely, reducing the potential growth rate of the global economy. The World Trade Organization predicts that global trade will shrink 13% to 32% this year due to the epidemic, which may exceed the level during the 2008 international financial crisis. The epidemic has led to a slowdown in global economic growth, further depressing external demand and bringing greater pressure to the foreign trade field. Third, the short-term "shock" of most industries has affected the key nodes of the global supply chain. In recent decades, global integrated mass production has become an important source of global economic growth, and the stagnation of economic activities in various countries can easily lead to the blockage or even interruption of global supply chains. Fourth, the epidemic has also affected the expectations of global investors, and "black swan" incidents have occurred frequently in international financial markets. In March, US stocks plunged four times, triggering the fuse mechanism. On April 20, the settlement price of international crude oil futures fell to negative value for the first time in history, and financial risks resonated with the downturn of the real economy.
The epidemic has also brought unprecedented impact to domestic economic and social development. First, the production and operation arrangements of enterprises have been affected. The extension of the Spring Festival holiday and the delay in returning to work have reduced the effective working days, and the traffic restrictions in some provinces and cities have also affected the flow of people and logistics needed for production. These losses have been reflected in the GDP growth rate in the first quarter. Second, demand-side indicators slowed down year-on-year. Since the beginning of this year, retail, catering, tourism and other consumer spending has dropped significantly, and the epidemic has also profoundly affected the behavior of economic entities, especially consumers may reduce their long-term consumption in crowded places such as shopping malls and cinemas. Third, external input risks will continue to impact the domestic economy. It is difficult to improve the situation of blocked international trade in the short term, and external demand may continue to decline, further slowing down China's economic growth. Generally speaking, the fundamentals of China's stable, long-term and high-quality economic development have not changed. In accordance with the decision-making arrangements of the CPC Central Committee and the State Council, all regions and departments have taken various measures simultaneously in the prevention and control of normalized epidemic situation to comprehensively promote the resumption of work and production and restore normal economic and social order. At the end of the first quarter, industrial enterprises above designated size in China were close to full resumption of work, and restaurants, hotels and other enterprises all over the country also resumed work one after another, and transportation and logistics were further restored. Economic data have improved since March.
However, we should also pay attention to the following risks. First of all, the duration and negative impact of the global epidemic may exceed expectations. The epidemic situation in developed countries in Europe and America is still serious, and the effect of efforts to restart the economy remains to be seen. The number of newly diagnosed cases in some developing economies and agricultural products exporting countries has increased rapidly, and the future trend of global epidemic situation is highly uncertain. Secondly, the effects and spillover effects of highly loose unconventional monetary and fiscal policies in major economies need close attention. Monetary and fiscal policies can only hedge against the negative impact of the epidemic. The future global economic recovery and financial situation still depend on the progress of epidemic prevention and control, and the negative effects of unconventional policies will gradually emerge. Third, the domestic economy still faces many challenges. Enterprises, especially small and medium-sized enterprises, are greatly affected by the epidemic, the pressure on residents' employment and social security is rising, the coordination of industrial chain resumption needs to be strengthened, and the supply and price stability of major agricultural and sideline products need to be continuously consolidated. Fourthly, there are uncertainties in China's balance of payments and cross-border capital flows. On the one hand, the central banks of major economies have greatly relaxed their monetary policies, and China has taken the lead in epidemic prevention and recovery. The higher returns and relative safety of RMB assets may attract cross-border capital inflows. On the other hand, the continuous weakening of external demand and the decline of investors' risk appetite may also lead to a decrease in exports and cross-border capital outflows.
In the next stage, prudent monetary policy should be more flexible and moderate, grasp the strength, rhythm and key points of policy introduction, handle the relationship between stable growth, employment protection, structural adjustment, risk prevention and inflation control, keep the growth rate of M2 and social financing basically matched and slightly higher than the nominal GDP growth rate, and support high-quality economic development with moderate monetary growth. Continue to maintain the two-way floating flexibility of the RMB exchange rate and do a good job of stabilizing expectations through multiple channels. Strengthen international policy coordination and effectively prevent and control the impact of international epidemic. At the same time, adhere to the bottom line thinking, maintain a high degree of vigilance against possible external risks, make forward-looking policy reserves, and promote the smooth operation of the national economy.