COVID 19 Pandemic is likely to bring the world economy this year into recession with the expected loss of trillions of dollars of the global income, making developing nations to get most affected expect China & India, as per the latest report of UN.
The United Nations has called for a $2.5 trillion (Rs 188.22 lakh crore) bailout package for prospering countries, where two-thirds of the world’s population livelihood is, the United Nations Conference on Trade and Development said. UNCTAD said this package will “turn expressions of international solidarity into meaningful global action”.
According to the new analysis from United Nations Conference on Trade and Development (UNCTAD), the UN trade and development body titled ‘The COVID-19 Shock to Developing Countries: Towards a ‘whatever it takes’ program for the two-thirds of the world’s population is left behind’, commodity-rich exporting countries will face a USD 2 trillion to USD 3 trillion drops in investments from overseas in the next two years.
In the upcoming days, advanced economies and China have put together massive government packages which, according to the Group of 20 leading economies (G20), will extend a USD 5 trillion lifeline to their economies.
However, the report didn’t mention how India and China will be the exceptions as the economies face a recession and loss in global income that will impact developing countries.
Further, given the crumbling global economies, fiscal and foreign exchange constraints are bound to tighten further over the course of the coming years.
In the face of a looming financial tsunami this year, UNCTAD proposes a four-pronged strategy that could begin to translate expressions of international solidarity into concrete action.
This includes a USD 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 canceled this year and a 500 billion dollars Marshall Plan for a health recovery funded from some of the missing official development assistance (ODA) long-promised but not delivered by development partners.
The hit which developing countries suffered from the pandemic came at the speed which sent the economic shockwaves, in comparison to the 2008 global financial crisis, the UNCTAD said.
The details which report mentions is developing countries have taken a massive hit in terms of capital outflows, growing bond spreads, currency depreciation, and lost export earnings, including from falling commodity prices and declining tourist revenues, in the two months since the virus began spreading beyond China.
According to reports, the death toll from the coronavirus pandemic has soared past 1, 10,000 while the number of confirmed cases topped 1,750,000 globally.