The world economy will enter into recession this year due to the coronavirus pandemic, with a predicted loss of trillions of dollars of global income, a United Nations report on trade said on Monday, pointing at a great trouble for developing countries, with the possible exception of India and China.
‘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,’ UN said.
The UN has called for a $2.5 trillion (Rs 188.22 lakh crore) bailout package for developing countries, which constitutes two-thirds of the world’s population, the UN Conference on Trade and Development said. It claimed that the package will ‘turn expressions of international solidarity into meaningful global action.’
‘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.
In last two months since the outbreak of COVID-19, developing countries have suffered an ‘enormous hit’ in terms of capital outflows, increasing bond spreads, currency depreciation and reducing export earnings.
Commodity prices have dropped and tourist revenues have lowered with an impact on the economy this year, which is expected to be worse than that of the 2008-09 crisis.
UN said that the commodity-rich exporting countries will witness a $2 trillion to $3 trillion fall in foreign investments in the coming two years.
Advanced economies and China have together come up with government packages which, according to the Group of 20, will inject $5 trillion (Rs 376.44 lakh crore) into their economies.
‘This represents an unprecedented response to an unprecedented crisis, which will attenuate the extent of the shock physically, economically and psychologically,’ the UN body said.
These package will infuse a demand of $1 trillion (Rs 75.37 lakh crore) to $2 trillion (Rs 150.74 lakh crore) into the global economy, and a 2% increase in global production. Even then, the global economy will enter recession, the report said.
Also Read: ‘Coronavirus Could Drag 11 Million Into Poverty’: World Bank Warns
