May 22, 2024

Developing economies to lose $12 trillion due to pandemic, UN warns

A township near the coast of Freetown, Sierra Leone, West Africa. (© Shutterstock)

The United Nations is warning that so-called developing countries will suffer losses of $12 trillion to their economies through 2025 as a result of the COVID-19 pandemic, while the slow rollout of vaccines will only make matters worse.

The figure is trimmed to $8 trillion if China is excluded, said Richard Kozul-Wright, the director of the U.N. Conference on Trade and Development’s globalization and development strategies division. The Geneva-based agency, which released its findings Wednesday, considers China a developing economy.

Calculations from UNCTAD also predict that in terms of lost income, delayed vaccinations alone will cost the world $2.3 trillion by 2025, with about $1.5 trillion of that hitting lower-income nations.

COVID-19 vaccine inequality widens gap in global recovery, IMF says

IMF is warning about a sharp divergence in the economic recovery between wealthier countries and the rest of the world due to COVID-19 vaccine inequality and uneven fiscal firepower.

UNCTAD’s figures show a divergent recovery. It estimates that global growth will hit 5.3% this year. “But underneath this, there is a lot of fragility, and the disparity among countries is very apparent,” Kozul-Wright told Devex. “This is a big hole in the finances of developing countries as a result of COVID-19.”

What about IP waivers? UNCTAD said it welcomed the White House supporting waivers for intellectual property related to vaccines but expressed concern that other leading countries were not following suit. This week, over 140 former heads of state and government and Nobel laureates issued a call for Germany’s next chancellor to waive IP rules.

What’s next: UNCTAD warned that the economic rebound this year is largely technical, in that the numbers are high now because last year’s contraction was so sharp. Next year, growth is expected to slow, and lower-income countries will experience negative consequences if advanced economies begin to pull back on spending.

“A lot now depends on policy choices — in particular, the ones that advanced economies make — over the next few years,” Kozul-Wright said, adding that austerity measures could stifle global growth.
Source: DEVEX