SYDNEY and KUALA LUMPUR, Mar 24 2020 (IPS) – The economic impact of the coronavirus pandemic is hard to predict as events are still unfolding, and estimates vary dramatically. estimates lost output in the order of US$1 trillion, just over a third of’s expectation of US$2.7 trillion in losses. The expects global economic growth to halve from already anaemic levels.
Dire consequences for achieving the already failing Agenda 2030 for the Sustainable Development Goals (SDGs) are inevitable. are particularly vulnerable, with meagre resources available for the new threat and its consequences.
As resources are urgently needed to cope with the pandemic, their ability to spend on other development priorities will be even more constrained. As with previous economic and health crises, poor and vulnerable sections of the population will be worse affected.
Ahead of the forthcoming G20 leaders’ virtual emergency meeting, the warned that current national responses to the coronavirus pandemic “will not address the global scale and complexity of the crisis”.
Anis Chowdhury
Millions could die without a more “coordinated global response, including helping countries that are less prepared to tackle the crisis”, as “global solidarity is not only a moral imperative, it is in everyone’s interests”.
Impact on developing countries
Besides the direct socio-economic impacts of the Covid-19 crisis, the pandemic will affect developing countries otherwise via: global value chain and tourism disruptions, falling commodity prices and foreign direct investment, as well as the consequences of capital flight and a stronger dollar.
reduced investments in global value chains, energy, mining, and other sectors, as well as falling travel and tourism in African countries due to reduced Chinese demand for raw materials as its economy slows further. is also expected to lose up to in export revenue due to reduced global demand, especially collapsing oil prices.
Commodity prices have already fallen sharply, and exporters expect more problems due to falling demand as the global economy slows. Heavily indebted developing countries are in a particularly difficult situation as their exports decline with falling global demand, and import and debt service costs rise due to weaker currencies as money flees to ‘safe havens’.
The estimates that around US$67.45 billion has flowed out of emerging countries since late January, an amount larger than emerging market capital outflows in the aftermath of the 2008-2009 global financial crisis and the 1997-1998 Asian financial crisis.
Impacts on working people
A new International Labour Office projects almost 25 million jobs could be lost worldwide, and workers could lose some US$3.4 trillion in income by year’s end.
Without paid sick leave, workers in the informal economy cannot afford to stay home.
Lockdowns will disproportionately hurt low-income households, casual workers and the poor, especially where social protection is grossly inadequate. Many lack the means to stockpile food or seek medical treatment.
Jomo Kwame Sundaram
Malnutrition, poverty and hunger induced health stresses compound vulnerability and feed vicious cycles of disease, destitution and death. As the , poverty worsens contagion, which can, in turn, deepen poverty.
of 11 sub-Saharan African, South and Southeast Asian countries found that without universal health coverage, poor people respond to health shocks with impoverishing ‘distress sales’ of their limited assets and by taking on more usurious debt.
Urban slums and refugee camps can become virus hotspots. For the world’s more than 65 million displaced people, who have fled war and persecution, and live precariously, the risks posed by the pandemic are .
By disrupting economic activity and cutting incomes, the pandemic is a new cause of impoverishment, besides limiting the ability of vulnerable households to escape from – and stay out of – poverty.
Support measures lack coordination
As of 9 March 2020, ‘donors’ (including governments, multilateral organizations and private funders) had pledged or given – directly to countries and to the WHO – for COVID-19 responses.
This included from the UN’s Central Emergency Response Fund to help vulnerable countries, not very much as the organization struggles with its own persistent underfunding.
Meanwhile, the announced US$12 billion in immediate support, while the (IMF) made available about US$50 billion in emergency financing for low income and emerging market countries, and “stands ready” to to help countries coping with the pandemic.
Concessional support from the IMF and the World Bank usually comes with onerous “one-size-fits-all” policy conditionalities, typically favouring influential shareholders.
The have set up a US$125 million coronavirus drug fund, while ’s US$40 million plan seeks to stem the coronavirus spread in developing countries. Philanthropic support is typically oblivious of national development priorities, and may ‘distort’ public health or social protection.
These funds are inadequate, given the scale and complexity of the problem, especially as an early end to the pandemic remains highly unlikely. Different modes of pandemic control need to be considered to minimize the scale of disruption and threat.
Crucially, multilateral coordination remains seriously lacking beyond the valiant efforts of the WHO in the face of persistent criticisms and its own financing problems. The UN should show how slow progress on the SDGs has made us all much more vulnerable to the pandemic and its various consequences.
It will be important for the UN to play a stronger coordinating and leadership role, e.g., with the UN Sustainable Development Group (UNSDG) rapidly assessing the adverse impacts and funding needs of the Covid-19 pandemic in relation to Agenda 20.