UNCTAD: COVID-19 Hits Developing Countries' Economic Growth

The United Nations Conference on Trade and Development (UNCTAD) revealed that the COVID-19 pandemic response in developed countries has activated a resurgent state and suspended fiscal constraints, but international rules and practices lock developing countries into pre-pandemic responses and a semi-permanent state of economic stress.

On this annual occasion, Mahmoud Al Khafif, Senior Economic Affairs Officer with UNCTAD, delivered an opening speech at the physical and online launch event of the annual release of the UNCTAD report.

In his address at the opening of a press conference, Al Khafif spoke of the hard threats of pandemic lockdowns to trade and development faced by the world nations, especially the developing countries.

In that connection, he drew attention to the proposal and the data of this report which are drawn from the lessons of the pandemic, and include concerted debt relief and even cancellation in some cases; a reassessment of the role of fiscal policy in the global economy; greater policy coordination across systemically important economies; and bold support for developing countries in vaccine deployment.

Commenting on the report, Al Khafif said that developing countries' slowing growth underlines how the spread of the coronavirus is challenging the world’s economic recovery from the pandemic.

"By 2025, developing countries will be $12 trillion poorer because of the pandemic," he noted.

According to the recent report, lack of monetary autonomy and access to vaccines are holding many developing economies back, widening the gulf with advanced economies, and threatening to usher in another lost decade.

The economic experts of UNCTAD says 2021 will see the global economy bounce back thanks to the continuation of radical policy interventions begun in 2020 and a successful (if still incomplete) vaccine roll-out in advanced economies.

According to the report statistics, Global growth will hit 5.3%, its fastest rate in nearly five decades, while cumulative income is expected to lose about $13 trillion in 2020-22.

The report also affirmed that the world needs more effective multilateral coordination, without which recovery efforts in advanced countries will damage development prospects in the South and amplify existing inequalities.

“These widening gaps, both domestic and international, are a reminder that underlying conditions — if left in place, will make resilience and growth luxuries enjoyed by fewer and fewer privileged people,”  Rebeca Grynspan, the secretary-general of UNCTAD, said in the report.

Moreover, Grynspan said: “Without bolder policies that reflect reinvigorated multilateralism, the post-pandemic recovery in the developing countries will lack equity, and fail to meet the challenges of our time.”

Also in this regard, UNCTAD calls for concerted debt relief and in some cases outright cancellation in a bid to reduce the debt overhang in developing countries and avoid another lost decade for development.

Ultimately, Al Khafif stressed that the developed countries, World Bank, the International Monetary Fund, and the World Trade Organization should cooperate effectively with developing countries in this respect. "They should all stand together and be united in their response."

It's worth mentioning that the UN information center in Cairo has submitted specific and sufficient data on this occasion for the annual conference of the UNCTAD Organization.