More than six months into the coronavirus (COVID-19) pandemic, the world is nowhere close to seeing the end of the virus or to finding a vaccine or a drug to treat patients. In fact, even as countries around the world are preparing to ease lockdown measures aimed at containing the spread of the virus, the World Health Organisation (WHO) issued a serious warning, saying, “this is not the time for any country to take its foot off the pedal”.
The COVID-19 caseload is approaching seven million worldwide, with nearly 400,000 deaths. WHO said more than 100,000 cases have been reported on nine of the past 10 days, culminating in the highest one-day total so far, on Sunday. Most cases came from 10 countries, mainly in the Americas and South Asia.
While the situation in Europe is improving, “globally it is worsening”, the Head of the WHO was quoted in the international media as saying. Guyana’s neighbour, Brazil, is also struggling to grapple with the rising cases of infections and deaths daily. What is certain is that the pandemic will be with us for quite some time and the massive social and economic impacts will become truly known in days to come.
The World Bank Group had made available an initial package of up to US$12 billion in immediate support aimed at assisting countries to cope with the health and economic impacts of the global outbreak. This financing was designed to help member countries take effective action to respond to and, where possible, lessen the tragic impacts posed by the virus.
The financing was aimed at helping developing countries strengthen health systems, including better access to health services to safeguard people from the pandemic; strengthen disease surveillance; bolster public health interventions; and work with the Private Sector to reduce the impact on economies.
The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction. A recent report by the World Bank has provided a worrying assessment of what is to come as it relates to the impact of the pandemic on economies.
According to the World Bank in its June 2020 Global Economic Prospects, the global economy will shrink by 5.2 per cent this year. “That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870,” the report states.
Among the Bank’s projections are: the economic activity among advanced economies is anticipated to shrink seven per cent in 2020 as domestic demand and supply, trade, and finance have been severely disrupted; Emerging Market and Developing Economies (EMDEs) are expected to shrink by 2.5 per cent this year, their first contraction as a group in at least 60 years and per capita incomes are expected to decline by 3.6 per cent, which will tip millions of people into extreme poverty this year.
The World Bank explained that the blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing. “While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.”
Under the baseline forecast – which assumes that the pandemic recedes sufficiently to allow the lifting of domestic mitigation measures by mid-year in advanced economies and a bit later in EMDEs, that adverse global spillovers ease during the second half of the year, and that dislocations in financial markets are not long-lasting – global growth is forecast to rebound to 4.2 per cent in 2021, as advanced economies grow 3.9 per cent and EMDEs bounce back by 4.6 per cent.
According to the World Bank, the pandemic highlights the urgent need for health and economic policy action, including global cooperation, to cushion its consequences, protect vulnerable populations, and strengthen countries’ capacities to prevent and deal with similar events in the future.
The Bank suggests that “Emerging Market and Developing Economies with available fiscal space and affordable financing conditions could consider additional stimulus if the effects of the pandemic persist. This should be accompanied by measures to help credibly restore medium-term fiscal sustainability, including those that strengthen fiscal frameworks, increase domestic revenue mobilisation and spending efficiency, and raise fiscal and debt transparency”.
