The United Nations has declared that the world is facing a global health crisis unlike any in the 75-year history of the United Nations — one that is killing people, spreading human suffering, and upending people’s lives. Given its nature and implications, the crisis is much more than a health crisis; it is, in essence, a human crisis: the coronavirus disease (COVID-19) is attacking societies at their core.
– The crisis has social, economic, as well as complex multidimensional impacts.
– COVID-19 is hitting hard a still weak and at times fragile global economy, plunging the economy into a recession, with the potential of deep consequences and historical levels of unemployment and deprivation.
– Necessary measures to contain the spread of the disease through quarantines, travel restrictions and lockdown of cities have resulted in a significant reduction both in demand and supply at the global and national scale. Economic activities in transportation, retail trade, leisure, hospitality, tourism and recreation have been battered.
– Self-employed workers or workers employed by small and medium-sized enterprises are specially exposed to response measures adopted to address the pandemic.
– Supply chain disruptions halting the manufacturing industry and falling commodity prices, further compound the overall economic impact of the pandemic. IMF projects that global growth will turn sharply negative in 2020, while at least 170 countries will experience negative per capita income growth this year.
– The array of response measures adopted to address the pandemic have equally rattled financial markets and tightened liquidity conditions in many countries.
– This dire outlook includes both advanced and developing countries with almost no society exempted from the ravages of pandemics and the strictures of economic contraction.
– However, developing countries are at high risk, due both to having weaker health systems and facing the challenge of fighting the virus in densely populated cities and vast poverty-stricken slums—where social distancing, has been demonstrated, is hardly an option.
– Furthermore, according to IMF, developing countries are dangerously exposed to the ongoing demand and supply shocks, a drastic tightening in financial conditions, collapse of commodity prices and shrinking remittances and some may face, in addition, an unsustainable debt burden.
– Massive external pressure on the foreign exchange markets and increasing dollar shortages in some countries has created the conditions for unprecedented outflows of capital from developing countries that, according to the IMF, are more than three times larger than those for the same period of the global financial crisis, with portfolio outflows from emerging markets amounting to about $100 billion.
– Weak local currencies will constrain the government’s ability in developing countries for fiscal stimulus at the scale needed to boost economic recovery and, simultaneously to tackle the health and human crisis.
Sustainability and Climate Change
– The COVID-19 crisis is likely to have a profound and negative effect on sustainable development efforts. In fact, it risks reversing decades of progress in the fight against poverty and exacerbating already high levels of inequality within and between countries.
– The most vulnerable, including women, children, the elderly, and informal workers, will be hit the hardest while the impact on the environment, on the other hand, is likely to be positive only on the short term, unless countries deliver on their commitment to sustainable development once the crisis is over and the global economy is able to start its recovery.
– A prolonged global economic slowdown will adversely impact the implementation of the 2030 Agenda for Sustainable Development and the Paris Agreement on Climate Change.
– Furthermore, because of the size, scope and pace of the pandemic, and the sizable capital outflows from developing countries, there is currently a significant risk that most political capital and limited financial resources be absorbed by the response and diverted away from the implementation of the Nationally Determined Contributions to achieve climate targets and the Sustainable Development Goals.
Decisive, urgent and coordinated action by all leaders of nations, businesses, finance, science and communities is needed to suppress transmission of the virus as quickly as possible and control the pandemic.
In addition, it is vital that in the response to the crisis, countries keep the sustainable development goals and long-term climate commitments in focus to hold on to past gains on sustainable development, and in the recovery, to make investments that propel us toward a more inclusive, sustainable and climate resilient future.
This synthesis is based on the following sources
– SHARED RESPONSIBILITY, GLOBAL SOLIDARITY: Responding to the socio-economic impacts of COVID-19. March, 2020.
– Kristalina Georgieva, IMF Managing Director (2020). Confronting the Crisis: Priorities for the Global Economy. April 9, 2020
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