The United Nations, UN, Department of Economic and Social Affairs, DESA in a report, has said the output of developing countries will shrink by 0.7%.
The report titled “The World Economic Situation and Prospect, WESP,” report stated that the raging and devastating pandemic is projected to shrink the world economy by 3.2% in 2020 and also noted that gross domestic product, GDP in developed countries will plunge 5.0% by mid-2020.
“The global economic outlook has changed drastically since the launch of WESP 2020 in January”, observed Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development.
The coronavirus has unleashed a health and economic crisis, unprecedented in scope and magnitude, with lockdowns and border closures paralyzing economic activity and laying off millions of workers globally.
“With the large-scale restrictions of economic activities and heightened uncertainties, the global economy has come to a virtual standstill in the second quarter of 2020,” he added. “We are now facing the grim reality of a severe recession of a magnitude not seen since the Great Depression.”
Meanwhile, to fight the pandemic and minimize the impact of a catastrophic economic downturn, governments globally are rolling out fiscal stimulus measures that equal roughly 10% of the world’s GDP.
Although new infections and coronavirus-related death rates have recently slowed down, the pandemic’s future course remains uncertain, as does the economic and social consequences that will follow.
What is being done by governments around the world to save their various economies?
Now authorities around the world are torn between saving lives or reviving the economy, a difficult decision to make.
Some governments have, however, already began to cautiously lift restrictions in order to jumpstart their economies.
But recovery will largely depend on how well public health and fiscal measures work together to stem the spread of the virus, minimizing reinfection risks, safeguarding employment and restoring consumer confidence so that people can start spending again to boost the economy.
“The pace and strength of the recovery from the crisis”, explained Mr Harris, will also rest on “the ability of countries to protect jobs and incomes, particularly of the most vulnerable members of our societies.”
Without a quick breakthrough in vaccine development and treatment, DESA maintains that “the post-COVID-19 world will likely be vastly different”, from the one we knew.
Although a modest rebound of around 3.4%, mostly recovering lost output, is expected for 2021, the report spelt out that “the possibility of a slow recovery and prolonged economic slump, with rising poverty and inequality, looms large.”
Trade and tourism are paralyzed, while large deficits and high levels of public debt will pose significant challenges for developing countries and small island States.
The UN forecast makes clear that stronger multilateral support and solidarity to contain the pandemic, along with economic and financial assistance to countries hardest hit by the crisis, will remain “critical for accelerating recovery and putting the world back on the trajectory of sustainable development,”
