With uneven progress in containing contagion, worsened by the breakdown in multilateral cooperation due to mounting US-China tensions, recovery from the Covid-19 recessions of the first half of 2020 is now expected to be more gradual than previously forecast
Pandemic response measures
In the face of the Covid-19 pandemic, many governments, especially of Organization for Economic Cooperation and Development
(OECD) economies, have introduced massive fiscal and monetary packages for contagion containment, relief and recovery.
There has been much discussion in recent months about how workers who transitioned to working from home—and those who were deemed “essential”—are less affected by the layoffs and job losses brought on by lockdowns than are workers in “social” jobs that require closer human interaction (e.g. restaurant workers). However, our new IMF staff research
suggests that this does not tell the full story.
Covid-19 is expected to take a heavy human and economic toll on developing countries, not only because of contagion in the face of weak health systems, but also containment measures which have precipitated recessions, destroying and diminishing the livelihoods of many.
The recent explosion of private finance has nursed the hope
, dream or illusion that it can be mobilized for the public good, e.g., to achieve the Sustainable Development Goals, associated with Agenda 2030. However, such hopes ignore how changes in financial investing have deeply transformed corporations, national economies and prospects for the world economy and social progress.
Europe, like the rest of the world, faces an extended crisis. An element of social distancing—mandatory or voluntary—will be with us for as long as this pandemic persists. This, coupled with continued supply chain disruptions and other problems, is prolonging an already difficult situation. Based on updated IMF projections
released last month, we now expect real GDP in the EU to contract by 9.3 percent in 2020 and then grow by 5.7 percent in 2021, returning to its 2019 level only in 2022. If an effective treatment or vaccine for COVID 19 is found, the recovery could be faster—but the opposite would hold true if there are large new waves of infection.
They were promised the world but ended up in a Lebanese household. This is the story of many domestic workers in Lebanon. With a 70-year-old sponsor system still in place, domestic workers are tied to their employers with little or no basic rights. The ‘Kafala’ system is the major problem behind what we have been seeing in Beirut in the last months.
The 1971 Bretton Woods (BW) system collapse opened the way for financial globalization and transnational financialization. Before the 1980s, most economies had similar shares of trade and financial openness, but cross-border financial transactions have been increasingly unrelated to trade since then.
COVID-19 continues to race across the African continent. People are dying, and even more are being pushed into hunger and poverty, in many cases risking to overturn years of development gains.
Our world is transfixed by the great human toll and economic impact of the worst global pandemic in a century. For the 65 million inhabitants of small island developing states (SIDS), the impact of the novel coronavirus (COVID-19) is reminiscent of the worst forms of extreme weather events that SIDS contend with annually. Such events cost lives, undermine our hard-earned development gains, and hamper the aspirations and quality of life of our people. Our governments are routinely compelled to shift already scarce resources from social and economic investments to recovery and sustenance in the aftermath of disasters. For decades islands have been treading a development tightrope, which is increasingly precarious with the intensification of adverse climate impacts.
In his early February annual State of the Union address
, US President Donald Trump typically hailed his own policies for increasing wages and jobs to achieve record low US unemployment. Directly appealing to labour for a second term, Trump claimed exclusive credit for the US “blue-collar boom”.
The COVID-19 pandemic pushed economies into a Great Lockdown, which helped contain the virus and save lives, but also triggered the worst recession since the Great Depression. Over 75 percent of countries are now reopening at the same time as the pandemic is intensifying in many emerging market and developing economies. Several countries have started to recover. However, in the absence of a medical solution, the strength of the recovery is highly uncertain and the impact on sectors and countries uneven.
The practical challenge of quickly getting financial support in the hands of people who lost jobs amid the COVID-19 economic crisis has baffled advanced and developing economies alike. Economic lockdowns, physical distancing measures, patchy social protection systems and, especially for low-income countries, the high level of informality, complicate the task. Many governments are leveraging mobile technology to help their citizens.
The Covid-19 pandemic has significantly impacted most economies in the world. Its full impacts will not be felt, let alone measured, until it runs its course. Many countries are still struggling to contain contagion, while the costs on both lives and livelihoods will undoubtedly have long-term repercussions.
Exceptional times call for exceptional action. In response to COVID-19, the IMF has moved with unprecedented speed and magnitude of financial assistance to help countries protect lives and livelihoods. Economic stabilization and a sustainable recovery, however, will require more than financial assistance. For recovery to be sustainable, policymakers will need to strengthen economic institutions that enable resilient, inclusive policies.
As governments the world over struggle to revive their economies after the debilitating lockdowns they imposed following their failure to undertake adequate precautionary containment measures to curb Covid-19 contagion, neoliberal naysayers are already warning against needed deficit financing for relief and recovery.
Landless farmers who produce rice for the landlords of big “haciendas” can’t get more than a little pocket money from their harsh work—not enough to provide diverse and healthy food for their families. Seasonal workers on sugar-cane plantations know that they can count on only six months of earnings. When summer arrives, those whose irrigation facilities have been destroyed by typhoons, or those who never had any, struggle while waiting for the rain.
The COVID-19 pandemic is crippling the economies of rich and poor countries alike. Yet for many low-income and fragile states, the economic shock will be magnified by the loss of remittances—money sent home by migrant and guest workers employed in foreign countries.
Looking back to the start of 2020, the world has changed almost beyond recognition. To protect public health, the global economy was put into stasis. Shops closed, factories were mothballed, and people’s freedom of movement was severely curtailed.
No country has escaped the health, economic, and social impacts of the COVID-19 crisis. Tragically, more than 260,000 people have died and millions have been infected. The IMF is projecting global economic activity to decline on a scale not seen since the Great Depression. It is truly a crisis like no other.
By now, the impact of COVID19 on our daily lives has been well documented, especially in advanced economies. Anxiety about the future continues to grow everywhere. Much of the corporate news coverage we consume has focused on the toll this pandemic will take on mainland countries. Often neglected, however, is the unique position Pacific Island States find themselves in.
Remittances that support millions of households in Latin America and the Caribbean have plunged as family members lose jobs and income in their host countries, with entire families sliding back into poverty, as a result of the COVID-19 health crisis and global economic recession.