The economic fallout from COVID-19 is likely to get “much worse” before it gets better for some six billion people living in developing economies, the UN said on Monday, in an appeal for a $2.5 trillion rescue package to boost their resilience to further hardship. According to new analysis from UNCTAD, the UN trade and development body, commodity-rich exporting countries will face a $2 trillion to $3 trillion drop in investment from overseas in the next two years.
An economic downturn in these emerging economies was already evident in the last quarter of 2019 – before the new coronavirus outbreak emerged in central China last December – said Richard Kozul-Wright, UNCTAD director of globalization and development strategies. Rich industrial nations have already announced a $5 trillion global rescue package plan to provide an economic safety net to their businesses and workers. It is also expected to create $1 trillion to $2 trillion of demand among the major G20 economies, boosting global manufacturing by two per cent, he writes in his latest report.
Faced with a “a looming financial tsunami” this year, UNCTAD’s four-pronged strategy initially calls for a $1 trillion investment injection for weaker economies. his would come from so-called “special drawing rights” governed by the International Monetary Fund (IMF) which would need to “go considerably beyond” the 2009 allocation made in response to the global financial crisis, the agency’s report explains. The second measure is a debt freeze for distressed economies, involving an immediate standstill on sovereign debt payments, followed by significant debt relief. The third measure targets $500 billion investment in poorer countries’ emergency health services and related social relief programmes.
Source: The UN
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