Sohini Chowdhury, Ph. D., director and senior economist at Moody’s Analytics, had a sobering message for credit union professionals during a May 19 World Council webinar: we are indeed in a global recession.
Chowdhury shared that news as the featured presenter on the webinar: Global Economic Impact of COVID-19 on Credit Unions and Related Accounting Issues.
Chowdhury explained how global gross domestic product would see negative growth in 2020 due to the COVID-19 pandemic.
“In 2021 and 2022, our forecast is positive, but it will be awhile before we get there,” said Chowdhury.
Along with presenting Moody’s Analytics’ forecasts and projections on the recession, Chowdhury explained how credit unions will be specifically impacted, based on a number of factors, including:
- GeoExposure. Where your credit union is based and how your local economy weathers the pandemic.
- Membership base. Are you members concentrated in a specific industry that is more exposed, such as travel or tourism? Or are your members largely working in professionals services and still earning a salary?
- Product lines. What loan products are most prevalent for your credit union? Mortgages? Auto loans? Credit cards? There was a hierarchy of payments Moody’s saw in the last recession, which could be at play now.
- Lender-assistance programs. What type of assistance is your country providing to credit unions and members? Are borrowers receiving money while they are out of work?
Chowdhury also explained why accounting issues will likely be complicated for credit unions going forward due to:
- A rapidly changing economic outlook.
- Lender and borrower assistance programs that differ from country-to-country.
- Lack of clarity on the implementation of national regulations, despite flexibility and relief being provided by international standard setting bodies.
World Council Senior Vice President of Advocacy Andrew Price echoed Chowdhury’s comments, saying those accounting concerns are already being reflected in the types of relief measures filtering through the international standard setting bodies.
World Council President and CEO Brian Branch also made a presentation on the three waves of recession credit unions are likely to face.
“The biggest thing we are hearing from most credit unions is the impact on their capital reserves and how they are working to deal with that,” said Branch.
You can watch the entire webinar on World Council’s YouTube Channel.