Covid’s economic fallout to outlast health shocks: Unctad

A feasible vaccine will not help to halt the economic damage being caused by the Covid-19 pandemic but the globe, especially the poorest and most vulnerable nations, will feel it for much longer, warns the United Nations Conference on Trade and Development (Unctad).

The report, published on 19 November, projects the global economy will shrink by a shocking 4.3% in 2020 and warns the crisis may send an additional 130 million people into extreme poverty.

The report – Impact of the Covid-19 Pandemic on Trade and Development: Transitioning to a New Normal – finds that the United Nations' Sustainable Development Agenda 2030 will be derailed unless immediate policy actions are taken, especially in favour of the poorest.

A better recovery must centre on renewed trade policy that tackles the twin challenges of market concentration and environmental impact, the report says.

It also notes there is a pressing need to reshape global production networks to be more green, inclusive and sustainable while simultaneously resetting the multilateral system to support the most vulnerable and deliver on climate action.

In the report, Unctad tracks the deepening impact of the virus on all areas of the world economy and maps how the crisis has affected global trade, investment, production, employment and, ultimately, individual livelihoods.

"Global poverty is on the rise for the first time since the 1998 Asian financial crisis. In 1990, the global poverty rate was 35.9%. By 2018, it had been curtailed to 8.6% but has already inched up to 8.8% this year and will likely rise throughout 2021," it reads.

Additionally, Covid-19 has had an excessive effect on two sectors – tourism, and micro, small and medium enterprises – which employ many vulnerable groups.

These and other setbacks, such as school closures that threaten 20 years of progress in expanding access to education, especially for girls, will have strong negative impacts on the productive capacity of countries well into the future, the report finds.

The disparities caused by the Covid-19 crisis are glaring, and vaccine production and delivery will likely underscore the limited capacity of most developing and least developed countries (LDCs) to respond to the crisis, says the report.

The report estimates over 79% of workers in sub-Saharan Africa and more than 84% of workers in LDCs do not have access to any social protection or labour programmes.

The report calls for stepped-up international assistance, which should include offering debt relief to many poorer nations so that they have the fiscal space needed to address the pandemic's economic impacts on their populations.