The global economy will contract 4.3 per cent this
year due to the Covid-19 crisis, while a viable vaccine will not halt the
spread of the economic damage, UNCTAD, the United Nations trade and development
body, said on Thursday.
The Geneva-based organisation said inequalities and
vulnerabilities will worsen as the effects of the pandemic disrupt any progress
made on poverty and other sustainable development goals. It also warned that
the distribution of a viable vaccine is likely to expose long-entrenched
inequalities in the global trading system.
“The Covid-19 pandemic has gravely wounded the
world economy with serious consequences impacting all communities and
individuals," said UNCTAD secretary-general Mukhisa Kituyi.
“Moving rapidly across borders, along the principal
arteries of the global economy, the spread of the virus has benefited from the
underlying interconnectedness – and frailties – of globalisation, catapulting a
global health crisis into a global economic shock that has hit the most
vulnerable the hardest.”
While developed economies are expected to be more
affected in 2020 than developing countries, with their gross domestic product
contracting 5.8 per cent versus 2.1 per cent, UNCTAD said the United Nations’
Sustainable Development Agenda 2030 will be derailed unless immediate policy
actions are taken.
The recovery must also centre on renewed trade
policies that tackle the twin challenge of market concentration and
environmental impact, the report says, and global production networks must be
more green, inclusive, and sustainable while simultaneously resetting the
multilateral system, to support the most vulnerable and deliver on climate
Since the start of the outbreak in China last year, more than 1 million
people have lost their lives, with uncertainty remaining about how and when the
pandemic will run its course.
However, UNCTAD said the unprecedented economic
shock generated by the global health emergency has already sharply exposed the
global economy’s pre-existing weaknesses, severely setting back development
progress around the world.
In 1990, the global poverty rate was 35.9 per cent
before falling to 8.6 per cent by 2018. However, it has inched up to 8.8 per
cent this year and will likely rise throughout 2021.
“Millions of jobs have already been lost, millions
of livelihoods are at risk, and an estimated additional 130 million people will
be living in extreme poverty if the crisis persists,” UNCTAD said.
The Covid disruption has had real and
disproportionate consequences on vulnerable and disadvantaged low-income
households, migrants, workers in the informal sector and, often, women, UNCTAD
said, with those working in the tourism and microenterprise sectors
“Especially in the developing world, many of these
populations are not protected by social safety nets and yet are particularly
affected by soaring unemployment,” UNCTAD said.
The report said about 79.4 per cent of workers in
sub-Saharan Africa and 84.5 per cent of workers in the world's least developed
countries do not have access to any social
protection or labour programmes.
report calls for international assistance to be stepped-up with debt relief
offered to poorer nations to give them the fiscal space needed to address the
economic effects of the pandemic on their populations.
has been painful and course-altering, but it is also a catalyst for needed
change,” Mr Kituyi said. “We need to reshape global production networks and reset
multilateral cooperation for the better.”
production networks must also play a critical role in producing and
distributing the new vaccine to the most vulnerable, UNCTAD said, as they have
in moving critical medical supplies during the crisis.
that vaccine deployment will likely expose long-entrenched inequalities in the
global trading system that must be changed to “recover better”.