The coronavirus pandemic has hit at a particularly vulnerable time when the global economy is still struggling to robustly recover from the 2008-2009 Great Recession and multilateralism is facing serious threats.
Thus, despite significant measures by national governments to tackle the pandemic, global efforts remain inadequate and uncoordinated.
The lack of concerted and coordinated global effort will have substantial economic, social and humanitarian impacts, threatening the achievement of already failing Agenda 2030 for sustainable development Goals (SDGs).
Ahead of the forthcoming G-20 virtual emergency meeting, the UN Secretary-General warned that the current national responses to the coronavirus pandemic "will not address the global scale and complexity of the crisis", and millions of people would die without a coordinated global response.
Urging Governments to fully meet the World Health Organisation's (WHO) appeals for funds, Mr. António Guterres emphasised that "global solidarity is not only a moral imperative, it is in everyone's interests".
While the economic impact of coronavirus pandemic is hard to predict as events are still unfolding fast, estimates vary dramatically.
For example, the OECD has halved its projection of already anaemic global economic growth. The Asian Development Bank expects losses ranging from US$77 billion to US$347 billion. UNCTAD puts the figure of lost output in the order of US$1 trillion, while Bloomberg expects it US$2.7 trillion.
Developing countries are particularly vulnerable with meagre resources to handle the health crisis, and cushion social and economic fallouts.
When resources are needed to combat the pandemic, their ability to spend on other development priorities, such as combating climate crisis, will be severely constrained.
As in the case of previous economic and health crises, the poor and vulnerable section of the population will be disproportionately affected.
Besides direct socio-economic impacts of the health crisis, there are several channels through which the pandemic will affect developing countries. These are: global value chain disruptions, tourism industry collapse, commodity price falls, capital flights & declines in foreign investment, stronger dollar.
For example, global buyers cancelled orders worth US$133 million of garments from Bangladesh hitting hard the US$34 billion apparel sector, which contributes 84.2% to the total exports and employs about four million people, mostly women. Observers expect dire consequences if the pandemic cannot be tackled sooner.
Commodity exporters will face serious problems due to falling demand with the global economy nearing a recession. Sub-Saharan Africa is expected to lose up to US$4 billion in export revenue due to dampen global and Chinese demands, and US$30 billion due to lower oil prices, making the estimated export revenue loss of about US$34 billion by the end of the year.
Heavily-indebted developing countries will be particularly in a difficult situation because of their declining exports decline, while debt servicing and import costs rise due to stronger US$ with investors looking for a safer haven.
The Institute for International Finance 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 (GFC) and the 1997-1998 Asian financial crisis (AFC).
A new International Labour Organisation (ILO) report projects that almost 25 million jobs could be lost worldwide and workers could lose some US$3.4 trillion in income by year's end.
Lockdowns will disproportionately hurt low-income households, casual workers and the poor, especially when the social protection system is either non-existent or seriously inadequate.
Workers in the informal economy do not have the luxury of staying at home without paid sick leave. People living in or near poverty lack cash to easily stockpile food, or to seek treatment.
If the past is any guide, we can get an idea about the magnitude of the poverty impact of economic crisis due to the pandemic.
For example, food price increases during 2005-2008 pushed around 200 million more people into extreme poverty, and about half of them remained trapped in poverty even as food prices fell.
By 2010 there were an extra 106 million more extreme poor, and about 200,000 to 400,000 more babies died each year due to the 2008-2009 GFC.
Malnutrition and other forms of poverty and hunger induced health stresses compound vulnerability to the virus and contribute to a vicious cycle of disease, destitution and death. As the Ebola epidemic revealed, poverty can fuel contagion, but contagion can also create or deepen impoverishment.
Studies of 11 sub-Saharan Africa and South and Southeast Asia countries found that in the absence of some forms of universal health coverage or affordable health insurance, poor or near poor people respond to health shocks often by distress sales of assets and borrowing from informal moneylenders at exploitative rates.
Urban slumps and refugee camps will be virus hotspots. For the world's more than 65 million refugees and displaced people who have fled war and persecution and are living in a precarious situation, the risk posed by the pandemic is potentially dire.
Therefore, the virus will be a new source of impoverishment, reinforcing existing factors and limiting the ability of vulnerable households to escape from – and stay out of – poverty.
Support measures inadequate
As of March 9, 2020, 'donors' (including governments, multilateral organizations and private funders) have pledged or given an estimated US$8.3 billion – directly to countries and to the WHO – for COVID-19 responses.
This included US$15 million from the UN's Central Emergency Response Fund to help vulnerable countries, not a significant amount as the organization struggles with its own persistent underfunding.
Meanwhile, the World Bank announced US$12 billion in immediate support, while the International Monetary Fund (IMF) has made available about US$50 billion in emergency financing for low income and emerging market countries, and "stands ready" to use its US$1 trillion lending capacity to help countries coping with the pandemic.
Bill & Melinda Gates Foundation and Wellcome Trust set up US$125 million coronavirus drug fund, and Mike Bloomberg announced US40 million plan to combat coronavirus spread in developing countries.
However, concessional support from the IMF and the World Bank usually comes with onerous "one-size-fits all" policy conditionalities, typically favouring influential shareholders.
Philanthropic support is typically oblivious of national development priorities, and may 'distort' public health or social protection.
Lack of global leadership
Crucially, multilateral coordination remains seriously lacking beyond the valiant efforts of the WHO in the face of persistent criticisms and its own financing limitations.
This is vastly different from the response to the 2008-2009 GFC. The G-20, a somewhat obscure forum of finance ministers – formed in the wake of the 1997 AFC – was significantly upgraded to a new global decision-making bloc in order to steer the world to safety.
At the G-20 London Summit in April 2009, the leaders promised an injection of US$1.1 trillion into the global economy with the specific aim of assisting low and middle-income countries.
Hope for a similar "concerted global, governmental response" as called for by former British Prime Minister Gordon Brown, who led the international response to the GFC, is very dim. There has been significant erosion of our capacity for collective action since then.
The Trump administration is actively hostile to global systems. The European Union lacks vision and unity after turning inward during the eurozone crisis. The United Kingdom, after the Brexit fixation for the past four years, now has an inward-looking Prime Minister in the image of Mr. Trump.
The hope in the rise of BRICS—Brazil, Russia, India, China and subsequently South Africa—as a major forum of emerging powers has been short-lived. Today, these countries that once looked like new global leaders have slid toward authoritarianism, populism or both. Their once-promising emerging economies slowed down considerably.
Stronger UN role
Therefore, it will be crucially important for the UN, the most inclusive global institution, to play a strong coordinating role. The first step for the UN Sustainable Development Group (UNSDG) would be rapid assessments of socio-economic impacts and funding needs for mitigating bearings on Agenda 2030. The UN Regional Commissions can play a crucial role in this regard as regional impacts and needs vary.
The author is adjunct professor at Western Sydney University and the University of New South Wales (Australia). He has held senior United Nations positions in New York and Bangkok.