The world has been under lockdown for the past many months, resulting in huge economic losses, unemployment, hunger, and lack of basic freedoms. Developed countries like the USA and the UK should have taken the lead in the fight against this virus but both have miserably failed in containing the virus in their own countries. The situation in Italy and Spain is a lesson for all of us on how this virus cannot be taken lightly and if we do so, the damage it can cause is right there before our eyes.
In the developing countries, till now there has been less number of deaths, despite the higher population density, as compared to developed countries. This may be due to lack of resources and testing kits rather than moderation in the intensity of the virus. Most developing countries are already in huge debt to foreign donors and if they have to grapple with more cases and more deaths related to Covid-19, it will eventually require more aid and help from developing nations. Covid-19 has thus put a burden on both developing and developed countries that is unprecedented, with lockdowns and border closures incapacitating economic activity and causing unemployment of millions of workers globally. Covid-19 has also put question marks of uncertainty and vulnerability on economic activities. The world is staring down the barrel, at a severe recession such has not been seen since the Great Depression. All countries will be severely affected by this, particularly the developing countries.
The countries that have been economically unstable have been making appeals to developed countries to come to their aide. The recently announced debt relief by the G-20 is a welcome step but is that enough for developing countries?. According to a report jointly authored by UNICEF and humanitarian organisation ‘Save the Children’, “The economic fallout of the COVID-19 pandemic could push up to 86 million more children into household poverty by the end of 2020”. The analysis highlighted that without urgent action to protect families from the financial hardships caused by the pandemic, the total number of children living below the national poverty line in low and middle-income countries could reach 672 million by the year-end.
Recently, the United Nations Conference on Trade and Development (UNCTAD) warned that the developing and poorest countries, including India, would need $2.5 trillion from international financial organisations, particularly the International Monetary Fund, for combating the Covid-19 pandemic. In a report titled, “The Covid-19 Shock to Developing Countries,” UNCTAD has revealed that “in the two months since the virus began spreading beyond China, developing countries have taken an enormous hit in terms of capital outflows, growing bond spreads, currency depreciations and lost export earnings, including from falling commodity prices and declining tourist revenues.”
Developing countries will continue to suffer post-corona because of lack of resources. The debt-ridden countries cannot adequately provide their citizens with basic necessities even in normal times and it will get worse in this pandemic. Developing nations have had to impose a lockdown at the cost of their economies. The worst is yet to come for them. Even if the developed countries manage to control the repercussions, the situation in developing and least developed nations will have consequences far beyond the borders, thus creating the risking that the virus will re-emerge in developed nations. So, what is the need of the hour? What is the responsibility of the developed nations and the international forums? Against the backdrop of the raging Covid-19 pandemic, the world economy in 2020 is projected to shrink by 3.2 percent, racking up some $8.5 trillion in overall losses – wiping out nearly four years of output gains, according to a mid-year economic analysis by the United Nations.
In its World Economic Situation and Prospect (WESP) report update, the UN Department of Economic and Social Affairs (DESA) said that as of mid-2020, the gross domestic product (GDP) in developed countries will plunge to -5.0 percent, while the output of developing countries will shrink by 0.7 percent. “The global economic outlook has changed drastically since the launch of WESP 2020 in January”, observed Elliott Harris, UN Chief Economist and Assistant Secretary-General for Economic Development.
For developed nations, the main issue is tackling the health crisis, whereas for the developing nations, apart from the health crisis, they have to look after poor people, those who have been working in non-formal sectors, daily-wagers, falling exports, falling remittances, etc. The fiscal space in developing countries is not enough to revive the economy or to look after the poorer sections of society, thus pointing towards a dark future post Covid-19. Many developing nations have shortfalls in testing kits, protective gear and medical equipment, and because of lack of testing there are higher chances of numbers being significantly higher than the official numbers. Amidst all this, the developing countries have been left with no option but to ease the lockdown. This may bring temporarily relief to the common man but with lack of resources, the countries may see rise in the daily cases.
Let us take the example of India and Pakistan. Both the countries imposed nationwide lockdown to contain the spread of the virus, but with each passing day the economic condition in both the countries has gone from bad to worse. Both the countries have now eased the lockdown despite rising cases and Covid-related deaths. That tells us about the sad state of the developing nations.
There has been some help from G-20 in form of a debt relief to over 60 countries and also from the UNDP, in close coordination with World Health Organisation (WHO), in helping countries to deal with this crisis. The UNDP has provided support to many countries like Ukraine, Iran, Bosnia, Nigeria, Serbia, and Vietnam, but we need to take into consideration the fact that the help and the relief that has been extended does not measure up to the problems that have been created due to this current pandemic. The international community and the developed countries must come together and think beyond the immediate impact of the current crisis. They need to formulate a plan and underline a joint strategy that would provide the developing nations with resources to help them contain the virus, respond to its current state, and prevent an economic collapse.
The writer is a student of BA LLB at University of Kashmir