Only bold action can curb the economic fallout from COVID-19
Empty streets, shuttered shops, overflowing hospitals. The entire world is at war with an invisible enemy – the novel coronavirus. With a vaccine to protect against the disease still a distant possibility, our best weapon remains staying away from each other. But while social distancing saves lives, it drags down the global economy and threatens jobs.
The World Economic Situation and Prospects Monthly Briefing issued today by UN DESA found that the COVID-19 pandemic could shrink world economic output by 0.9 per cent in 2020, instead of growing 2.5 per cent, as previously projected. By comparison, the world economy contracted by 1.7 per cent during the global financial crisis in 2009.
“Urgent and bold policy measures are needed, not only to contain the pandemic and save lives, but also to protect the most vulnerable in our societies from economic ruin and to sustain economic growth and financial stability,” said Liu Zhenmin, UN Under-Secretary-General and head of UN DESA.
The UN DESA Briefing warns that millions of low-wage workers – in both formal and informal sectors – will suffer the most as they typically work in close proximity with others but often lack minimum social protection. The economic fallout could be even larger if restrictions on movement of people and range of economic activities extend beyond June and if fiscal responses fail to support income and consumer spending, especially those most affected by the pandemic.
But just how big a blow the virus will deal to our economies also depends on us and our policies. A well-designed fiscal stimulus package that prioritizes health spending and provides income support to households most affected by the pandemic would help to minimize the likelihood of a deep economic recession.
“While we need to prioritize the health response to contain the spread of the virus at all cost, we must not lose sight how it is affecting the most vulnerable population and what that means for sustainable development,” said Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development. “Our goal is to ensure a resilient recovery from the crisis and put us back on track towards sustainable development.”
Stay updated on the impact of the novel coronavirus on economic, social and sustainable development through the new UN DESA web portal just launched.