MADISON, Wis.–During a webinar hosted by the World Council of Credit Unions it was confirmed the world is indeed in a global recession, with the only good news being there will be a recovery—but not until 2021 at the earliest.
Dr. Sohini Chowdhury, director and senior economist at Moody’s Analytics, said during the webinar titled “Global Economic Impact of COVID-19 on Credit Unions and Related Accounting Issues,” told attendees, “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 offered insights into how credit unions will be specifically affected, including:
- GeoExposure. Where your credit union is based and how your local economy weathers the pandemic.
- Membership base. Are members concentrated in a specific industry that is more exposed, such as travel or tourism? Or are your members largely working in professional 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?
Complications
According to Chowdhury, what is going to complicate accounting issues for CUs moving forward are factors that include:
- 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 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.
The webinar can be found on World Council’s YouTube Channel.
Effort in Ukraine
Separately, in Ukraine, WOCCU said its programs are working to keep frontline Ukrainian credit union workers safe during the COVID-19 pandemic.
The Worldwide Foundation for Credit Unions is providing a Project Storm Break grant to World Council’s Credit for Agriculture Producers (CAP) Project for the purchase of masks, gloves and other personal protective equipment (PPE) that will go to staff and members of CAP's partner credit unions in Ukraine.
As CUToday.info reported earlier, the government had initially reported Ukraine’s credit unions to close. But since credit unions in Ukraine do not provide any digital or remote services to their members, most transactions require face-to-face interactions between members and staff, and the government agreed to reopen CUs that had safeguards in place.
Access to quality PPE will mitigate risks and keep credit unions in compliance with the COVID-19 regulations in place in Ukraine, WOCCU said.
‘The Whole Point’
“The whole point of our Project Storm Break fundraising drive in 2019 was to ensure we could get ahead of the next disaster and provide support to credit unions as soon as it hit,” said Mike Reuter, executive director of the Worldwide Foundation. “While we may have been preparing for an earthquake or weather-related disaster, we believe it is vital to utilize this fund during the COVID-19 pandemic with such a global need to keep credit union employees safe.”
Funded by USAID, The CAP Project is building the capacity of 23 partner credit unions in Ukraine to increase access to finance for rural and agricultural micro, small and medium enterprises and expand outreach. All 23 credit unions will receive personal protective equipment as a result of this grant agreement, WOCCU said.