The United Nation Conference on Trade and Development (UNCTAD) has warned that the COVID-19’s economic fallout will long outlive the health crisis.
In its latest report titled ‘Impact of the COVID-19 Pandemic on Trade and Development: Transitioning to a New Normal, released on Thursday, the UN agency said that inequalities and vulnerabilities will worsen as the effects of the pandemic undermine progress on poverty and other important sustainable development goals.
“But while there is growing confidence that an end to the health pandemic is in sight, a viable vaccine will not halt the spread of economic damage, which will be felt long into the future, especially by the poorest and most vulnerable,” the report says.
The report provides a comprehensive assessment of the economic knock-ons, projecting that the global economy will contract by a staggering 4.3 per cent in 2020 and warning that the crisis could send an additional 130 million people into extreme poverty.
UNCTAD Secretary-General Mukhisa Kituyi said the COVID-19 pandemic has gravely wounded the world economy with serious consequences for everyone.
“Moving rapidly across borders, along the principal arteries of the global economy, the spread of the virus has benefited from the underlying interconnectedness – and frailties – of globalization, catapulting a global health crisis into a global economic shock that has hit the most vulnerable the hardest,” Dr Kituyi said.
The report notes 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 challenge of market concentration and environmental impact,” the report says.
It also says that 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.
“The pandemic’s impact has been asymmetric and tilted towards the most vulnerable, both within and across countries, affecting disproportionately low-income households, migrants, informal workers and women,” the report adds.
Global poverty according to the report is also on the rise for the first time since the 1998 Asian financial crisis. In 1990, the global poverty rate was 35.9 per cent. By 2018 it had been curtailed to 8.6 per cent but has already inched up to 8.8 per cent this year and will likely rise throughout 2021.
“Additionally, COVID-19 has had disproportionate effect on two sectors – tourism and micro, small and medium-sized enterprises – which employ many vulnerable groups. For example, while older men may have suffered more from the health emergency, females and young people are most affected by the economic crisis. Across the 32 countries for which gender disaggregated data are available, the countries with higher COVID-19 incidence have seen greater increases in female unemployment than male,” the report notes.
The report estimates that about 79.4 per cent of workers in sub-Saharan Africa and 84.5 per cent of workers in LDCs do not have access to any social protection or labour programmes.
The report calls for stepped-up international assistance, which would 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.
In the report, the UN’s trade and development body provides a roadmap for recovery that requires an overdue and opportune shift in the structure of global trade and cooperation.
“COVID-19 has been painful and course-altering, but it is also a catalyst for needed change,” Dr. Kituyi said, adding “We need to reshape global production networks and reset multilateral cooperation for the better.”
Global production networks will play a critical role in producing and distributing the new vaccine, as they have in moving critical medical supplies during the crisis.
But vaccine deployment will likely expose long-entrenched inequalities in the global trading system that the report says must change to “recover better”.
“Now is the right time to address the weaknesses of globalization that led to the rapid spread of the virus around the world and its uneven economic impacts,” Dr. Kituyi said.
“Such efforts must go hand in hand with the arrival of potential vaccines to market, otherwise we risk reinforcing those inequalities that turned this health emergency into an economic crisis in the first place.”
The report says the crisis can be a catalyst for new, more resilient production networks based on value chains that are shorter, and more regional, sustainable and digital.
