Covid-19 pandemic may trigger worst downturn since Great Depression: UN

Both middle-income countries, with 75 per cent of the world's population and 62 per cent of the world's poor, are also highly vulnerable to a debt crisis, said UN Secretary-General Antonio Guterres

The Covid-19 pandemic could trigger the worst downturn in the global economy since the Great Depression, UN Secretary-General Antonio Guterres said.

He released his warning in a policy brief, saying the pandemic-induced economic contraction is having "disastrous consequences," including on the ability of countries -- and not just low-income countries -- to sustainably carry debt.
 

Both middle-income countries, with 75 per cent of the world's population and 62 per cent of the world's poor, are also highly vulnerable to a debt crisis, lost market access and capital outflows, the brief said.

While in the best-case scenario, recovery in developed countries' economies may start by the end of 2020 and then reverberate to developing countries, it is also possible that this may be the start of the worst economic downturn since the Great Depression, said the secretary-general.

Speaking at the virtual World Bank and International Monetary Fund spring meetings on "Mobilizing with Africa," Guterres said that during this crisis the African Union and the African continent have shown unity and leadership -- two of the most scarce commodities.

The secretary-general warned that, as with the climate crisis, the African continent could end up suffering the most from the crisis.

Deputy Secretary-General Amina Mohammed spoke by video to the Group of Friends on Food Security and Nutrition.

She told them that, in the face of the current pandemic, it will not take much to tip millions of more people into food insecurity. An economic shock on the scale expected presents a real and present danger.

The Food and Agriculture Organization, the African Union and international partners have issued a joint declaration in which they support access to food and nutrition for the most vulnerable in Africa during the pandemic.

They described the food and agriculture system as an essential service that must continue to operate during periods of lockdown, curfew and other containment measures.

"We have launched a Preparedness and Response Plan which required 38 million U.S. dollars for humanitarian, as well as social and economic recovery needs," UN Spokesperson Stephane Dujarric said.

An independent UN human rights expert, Philip Alson said the US must take urgent additional steps to prevent tens of millions of middle-class Americans hit by the Covid-19 pandemic from plunging into poverty.

He has warned that significant portions of America will soon face destitution unless Congress takes "far-reaching" actions.

"Low-income and poor people face far higher risks from the coronavirus due to chronic neglect and discrimination, and a muddled, corporate-driven, federal response [that] has failed them," said Alston, who made a fact-finding visit to the US in 2017.

He painted a grim picture of record layoffs, a weak safety net, and a government "focusing primarily on businesses and the well-off".

On March 27, President Donald Trump signed into law a historic $2 trillion emergency relief package which made its way through Congress, to provide stopgap funding for workers, small businesses and industry, impacted by the need to lockdown much of the country to halt the transmission of the Covid-19.

The US must take urgent additional steps to prevent tens of millions of middle-class Americans hit by the Covid-19 pandemic from being "plunged into poverty", he said.

Over a four-week period, more than 22 million people have filed for unemployment and US Federal Reserve economists reportedly project up to 47 million job losses through the summer.

Food bank use is skyrocketing and almost a third of housing tenants in the US reportedly did not pay April's rent on time.

The independent expert said that people in poverty were disproportionately threatened by the coronavirus.

A total of 154,142 people have died and 2,242,868 people have been infected by the novel coronavirus that originated in China in November last year, according to the varsity data.