Eight Out of Twenty Major Countries in the World are not in Lockdown

The world economy will go into recession this year with a predicted loss of trillions of dollars of global income due to the coronavirus pandemic, spelling serious trouble for developing countries with the likely exception of India and China, according to a latest UN trade report.

With two-thirds of the world’s population living in developing countries facing unprecedented economic damage from the COVID-19 crisis, the UN is calling for a USD 2.5 trillion rescue package for these nations.

India may not lift coronavirus lockdown before September, study says

India will begin lifting COVID-19 lockdown restrictions only between the fourth week of June and the second week of September, says a new study.

The “longer range” of lifting the restrictions was a result of expected challenges in India due to health system preparedness and record of public policy effectiveness, said the study by Boston Consulting Group (BCG).

The government announced a lockdown on March 24, joining other countries such as the UK, Poland, Colombia to impose curbs on movement and business activities.

The report by BCG, an American consultancy firm, is centred on epidemic projection on COVID-19. This report represents estimates as of March 25, based on a predictive modelling leveraging John Hopkins University data with full modelling constraints.

The report shines a light on country-wise epidemic scenarios:

The report provides estimated key dates of COVID-19 crisis on the following parameters:

- Status of the countries whether it is fully lockdown or not?
- Potential lockdown start dates
- The peak dates for respective countries.

- Short and long potential lockdown end date.

The BCG data suggests that the India lockdown started in line with China's timing of the lockdown.

According to the new analysis from United Nations Conference on Trade and Development (UNCTAD), the UN trade and development body titled ‘The COVID-19 Shock to Developing Countries: Towards a ‘whatever it takes’ programme for the two-thirds of the world’s population being left behind’, commodity-rich exporting countries will face a USD 2 trillion to $3 trillion drop in investments from overseas in the next two years.

The UNCTAD said that in recent days, advanced economies and China have put together massive government packages which, according to the Group of 20 leading economies (G20), will extend a $5 trillion lifeline to their economies.

“This represents an unprecedented response to an unprecedented crisis, which will attenuate the extent of the shock physically, economically and psychologically,” it said.

It added that while the full details of these stimulus packages are yet to be unpacked, an initial assessment by the UNCTAD estimates that they will translate to a $1 trillion to $2 trillion injection of demand into the major G20 economies and a two percentage point turnaround in global output.

“Even so, the world economy will go into recession this year with a predicted loss of global income in trillions of dollars. This will spell serious trouble for developing countries, with the likely exception of China and the possible exception of India,” the UNCTAD said.

The report, however, did not give a detailed explanation as to why and how India and China will be the exceptions as the world faces a recession and loss in global income that will impact developing countries.

Further, given the deteriorating global conditions, fiscal and foreign exchange constraints are bound to tighten further over the course of the year.

The UNCTAD estimates a $2 trillion to $3 trillion financing gap facing developing countries over the next two years.

In the face of a looming financial tsunami this year, the UNCTAD proposes a four-pronged strategy that could begin to translate expressions of international solidarity into concrete action.

This includes a $1 trillion liquidity injection for those being left behind through reallocating existing special drawing rights at the International Monetary Fund; a debt jubilee for distressed economies under which another one trillion dollars of debts owed by developing countries should be cancelled this year and a 500 billion dollars Marshall Plan for a health recovery funded from some of the missing official development assistance (ODA) long promised but not delivered by development partners.

The speed at which the economic shockwaves from the pandemic has hit developing countries is dramatic, even in comparison to the 2008 global financial crisis, the UNCTAD said.

“The economic fallout from the shock is ongoing and increasingly difficult to predict, but there are clear indications that things will get much worse for developing economies before they get better,” UNCTAD secretary-general Mukhisa Kituyi said.

The report shows that in 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.

Lacking the monetary, fiscal and administrative capacity to respond to this crisis, the consequences of a combined health pandemic and a global recession will be catastrophic for many developing countries and halt their progress towards the Sustainable Development Goals.

Even as advanced economies are discovering the challenges of dealing with a growing informal workforce, this remains the norm for developing countries, amplifying their difficulties in responding to the crisis.

“Advanced economies have promised to do ‘whatever it takes’ to stop their firms and households from taking a heavy loss of income,” said Richard Kozul-Wright, UNCTAD’s director of globalisation and development strategies.

He added: “But if G20 leaders are to stick to their commitment of ‘a global response in the spirit of solidarity’, there must be commensurate action for the six billion people living outside the core G20 economies”.

According to reports, the death toll from the coronavirus pandemic has soared past 35,000 while the number of confirmed cases topped 750,000 globally.