Covid-19: World economy will go into recession with likely exception of India, China, says UN report
UNITED NATIONS: The world economy will go into recession this year with a predicted loss of trillions of dollars of global income due to the coronavirus pandemic, spelling serious trouble for developing countries with the likely exception of India and China, according to a latest UN trade report.
With two-thirds of the worlds population living in developing countries facing unprecedented economic damage from the COVID-19 crisis, the UN is calling for a USD 2.5 trillion rescue package for these nations.
According to the new analysis from United Nations Conference on Trade and Development , the UN trade and development body titled The COVID-19 Shock to Developing Countries: Towards a whatever it takes programme for the two-thirds of the worlds population being left behind, commodity-rich exporting countries will face a USD 2 trillion to $3 trillion drop in investments from overseas in the next two years.
According to reports, the death toll from the coronavirus pandemic has soared past 35,000 while the number of confirmed cases topped 750,000 globally.
The UNCTAD said that in recent days, advanced economies and China have put together massive government packages which, according to the Group of 20 leading economies , will extend a $5 trillion lifeline to their economies. This represents an unprecedented response to an unprecedented crisis, which will attenuate the extent of the shock physically, economically and psychologically, it said.
It added that while the full details of these stimulus packages are yet to be unpacked, an initial assessment by the UNCTAD estimates that they will translate to a $1 trillion to $2 trillion injection of demand into the major G20 economies and a two percentage point turnaround in global output.
Even so, the world economy will go into recession this year with a predicted loss of global income in trillions of dollars. This will spell serious trouble for developing countries, with the likely exception of China and the possible exception of India, the UNCTAD said.
This includes a $1 trillion liquidity injection for those being left behind through reallocating existing special drawing rights at the International Monetary Fund; a debt jubilee for distressed economies under which another one trillion dollars of debts owed by developing countries should be cancelled this year and a 500 billion dollars Marshall Plan for a health recovery funded from some of the missing official development assistance long promised but not delivered by development partners.
