Economic Recovery under Threat amid Surging COVID-19, Says UN

Fiscal and monetary measures to steer recovery must take into account the differentiated impact of the crisis on different population groups, including women, to ensure an economic recovery that is inclusive and resilient.

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The surge in COVID-19 infections and inadequate vaccination progress in many countries threaten a broad-based recovery of the world economy, while the global growth outlook has improved led by robust rebound in China and the US, says the latest United Nations forecast released today. According to the World Economic Situation and Prospects (WESP) mid-2021 report, following a sharp contraction of 3.6 per cent in 2020, the global economy is now projected to expand by 5.4 per cent in 2021, reflecting an upward revision from the UN forecasts released in January 2021.

Amid rapid vaccinations and continued fiscal and monetary support measures, China and the US are on the path to recovery. In contrast, the growth outlook in several countries in South Asia, sub-Saharan Africa, and Latin America and the Caribbean, remains fragile and uncertain where the pandemic is still raging. India, with  daily new infections averaging over 300,000 during the third week of April, is now the new hotbed of the pandemic. The worst is far from over for Brazil, Argentina, Peru, and Colombia. The total number of new infections is higher for 99 countries in April 2021 relative to the number of new infections recorded during the last peak of the pandemic in December 2020. For a vast majority of developing countries, economic output will remain below 2019 levels for most of 2021, and is only projected to return to pre-pandemic levels in 2022 or 2023.


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Amid insufficient fiscal space to stimulate demand, many of these countries will face low and stagnant growth and the prospect of a lost decade. Timely and universal access to COVID-19 vaccines will remain critical for ensuring broad-based and inclusive recovery of the world economy. Widespread vaccinations will help to create herd immunity and allow reopening and resumption of economic activities.

The stark and growing disparity in vaccination coverage between countries—and growing vaccine nationalism—will severely undermine global recovery efforts.

Securing vaccines for their citizens will remain a daunting challenge for many developing countries. A few developed countries have procured most of the available supply to build national stockpiles of vaccines. It would be critically important for these countries to share their vaccine stockpiles with the developing countries that are struggling to procure vaccines for their citizens. Vaccine scepticism and hesitancy pose additional challenges to universal vaccinations. “Vaccine inequity between countries and regions is posing a significant risk to an already uneven and fragile global recovery,” said UN Chief Economist Elliott Harris. “Timely and universal access to COVID-19 vaccinations will mean the difference between ending the pandemic promptly and placing the world economy on the trajectory of a resilient recovery, or losing many more years of growth, development and opportunities.”

Global merchandise trade has already surpassed pre-pandemic levels, buoyed by strong demand for electrical and electronic equipment, personal protective equipment, and other manufactured goods. Manufacturing-dependent economies have fared better, both during the crisis and the recovery period, but a quick rebound looks unlikely for tourism- and commodity-dependent economies, the report says.

Trade in services, in particular tourism, will remain depressed amid slow lifting of restrictions on international travel and fear of new waves of infection in many developing countries. 

Women have been at the forefront of the fight against the pandemic. The pandemic has pushed an estimated 114.4 million people into extreme poverty, of which 57.8 million are women and girls. Women—representing most health service workers, caregivers and essential service providers—been hit the hardest in a number of ways, including bearing the brunt of unpaid domestic and care work.


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Further, women’s health and reproductive health suffered massive blows, unintended pregnancies increased, motherhood was delayed, and education disrupted, significantly undermining progress towards gender equality. Women also faced increased gender-based violence, and women entrepreneurs were disproportionately affected by business closures, further widening gender gaps in income and wealth. They remain underrepresented in pandemic-related decision-making and in economic policy responses to the crisis.

While the pandemic has reduced labour force participation (LFP) by 2 per cent worldwide, compared to only 0.2 per cent during the global financial crisis of 2007-08, more women than men were forced to leave the work force altogether. This widened gender gaps in employment and wages further according to the report. Women-owned businesses have also fared disproportionately worse.

“The pandemic has pushed nearly 58 million women and girls into extreme poverty, dealing a huge blow to poverty reduction efforts worldwide, and exacerbated gender gaps in income, wealth and education, impeding progress on gender equality,” said Hamid Rashid, the Chief of the Global Economic Monitoring Branch at the UN Department of Economic and Social Affairs, who is the lead author of the report. He added that “Fiscal and monetary measures to steer recovery must take into account the differentiated impact of the crisis on different population groups, including women, to ensure an economic recovery that is inclusive and resilient.”