A UN report alludes to the 240,000 lives stolen by the COVID-19 delta wave in India and warns that the global economic recovery is losing steam in the face of new waves of COVID-19 infections.
A key report on the global economy released by the UN Department of Economic and Social Affairs (DESA) today says that galloping spread of COVID-19 has put the brakes on a rapid recovery, counteracting signs of solid growth till the end of last year.
The slowdown is expected to carry on into next year. After an encouraging expansion of 5.5 per cent in 2021 — driven by strong consumer spending and some uptake in investment, with trade in goods surpassing pre-pandemic levels — global output is projected to grow by only 4.0 per cent in 2022 and 3.5 per cent in 2023.
Besides COVID-19, DEAS’s 2022 World Economic Situation and Prospects (WESP) report cites a cocktail of problems slowing the economy accruing from the COVID-19 pandemic.
“Global economic recovery hinges on a delicate balance amid new waves of COVID-19 infections, persistent labour market challenges, lingering supply-chain constraints and rising inflationary pressures,” the report says.
But, it has devoted space to the toll on India during during the COVID-19 Delta variant pandemic.
“In India a deadly wave of infection with the Delta variant stole 240,000 lives between April and June and disrupted economic recovery”
“Similar episodes could take place in the near term,” the report has cautioned.
The DESA top boss, Liu Zhenmin drew attention to the importance of a coordinated, sustained global approach to containing COVID-19 that includes universal access to vaccines. In the spirit of goal 10 of the sustainable development goals (SDG), he warned that, without it, “the pandemic will continue to pose the greatest risk to an inclusive and sustainable recovery of the world economy”.
The number of people living in extreme poverty is projected to remain well-above pre-pandemic levels, with poverty projected to increase further in the most vulnerable economies.
Optimistic about SouthAsia and East Asia
Output losses relative to pre-pandemic projections will remain substantial in most developing countries, the report says with half of the world’s economies expected to exceed pre-pandemic levels of output by at least seven per cent in 2023.
“In East Asia and South Asia, average gross domestic product (GDP) in 2023 is projected to be 18.4 per cent above its 2019 level, compared to only 3.4 per cent in Latin America and the Caribbean.”
But there is a word of caution too, as the report’s authors warn that this rise in GDP does not necessarily mean that countries will fully regain their output relative to trend output growth before the pandemic.
“Despite a robust recovery, East Asia and South Asia’s GDP in 2023 is projected to remain 1.7 per cent below the levels forecast prior to the pandemic,” they say in the report.
But SDGs will be impacted
Global poverty is projected to remain at record highs, the report says, impacting the poorest the most and hindering nations’ progress towards achieving SDG Goal 1. “Adverse impacts of the pandemic on growth and employment have significantly undermined progress on global poverty reduction, dashing hopes of achieving the Sustainable Development Goal of ending extreme poverty.”
“The number of people living in extreme poverty globally is projected to decrease slightly to 876 million in 2022 but is expected to remain well above pre-pandemic levels. Fast-developing economies in East Asia and South Asia and developed economies are expected to experience some poverty reduction.”
Once again, there is optimism around South Asia. The region’s recovery continues to gather momentum even as COVID-19 stays put thick in the air. But DESA researchers see more constrained policy space and downside risks lying ahead.
The recovery continues to gain momentum in South Asia even amid contained COVID-19 infections and higher mobility, robust remittance inflows and broadly supportive macroeconomic policy stances. the report says.
After an estimated expansion of 7.4 per cent in 2021, SouthAsia’s GDP is projected to grow at a more moderate pace of 5.9 per cent in 2022, according to the report. “The recovery, however, is still fragile, uneven and subject to pandemic-related uncertainties and downside risks. Labour market recovery is lagging, indicating severe socioeconomic challenges for large segments of the population.”
The prescription? “Policymakers will need to maintain critical support for recovery and job creation such as by prioritizing public infrastructure and green investments that crowd-in private finance.”