Photo: World Bank Authors: Johanne Buba, Hannah Uckat, Leonardo Iacovone, Denis Medvedev The COVID-19 pandemic took a heavy toll on the global economy, with world output falling by 3.5 percent year-on-year in 2020. Despite these large output losses, surveys from more than 60 countries conducted by the World Bank and partners between April and December 2020…
As the COVID-19 (Coronavirus) pandemic spreads relentlessly across the globe, the spillover could be enormous, especially in Low Income Countries (LICs) with rudimentary public health networks, fragile economies and incomplete social protection systems.
With the pandemic now starting to gather momentum in Africa, repercussions from the unprecedented downturn in the Organization for Economic Co-operation and Development (OECD) economies are already impacting jobs in the global south. Huge negative capital flows have rocked emerging economies. Attempted lockdowns have generated major disruptions in economies characterized by high levels of informality and by fractured, incomplete social protection systems. In such settings, measures intended to “flatten the curve” of viral transmission might have generated increased transmissions, as thousands of informal migrant workers have crowded together trying return home. And where such internal migrants play key roles in economic life, the disruption of labor supplies is affecting harvests and food production.
In the absence of adequate public policy responses, there is no guarantee that these effects will be limited to a transitory, “V shaped” downturn. The world economy could be facing a deep, “U” shaped recession, or even an “L – shaped” recession, with no obvious end point, like the great depression of the 1930s.
So, what can governments and international organizations do right away to support workers and firms to navigate the COVID-19 crisis, preserve jobs and incomes and prepare the way for a rapid recovery?