UNCTAD estimates lost output in the order of US$1 trillion, just over a third of Bloomberg’s expectation of US$2.7 trillion in losses. The OECD expects global economic growth to halve from already anaemic levels.– The economic impact of the coronavirus pandemic is hard to predict as events are still unfolding, and estimates vary dramatically.
Dire consequences for achieving the already failing Agenda 2030 for the Sustainable Development Goals (SDGs) are inevitable. Developing countries 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 UN Secretary-General warned that current national responses to the coronavirus pandemic “will not address the global scale and complexity of the crisis”.
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.
Analysts project 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. Sub-Saharan Africa is also expected to lose up to US$34 billion 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 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 and the 1997-1998 Asian financial crisis.
Impacts on working people
A new International Labour Office report 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.