Now that the world is gradually succeeding in flattening the curve in terms of coronavirus cases, fears of a severe economic crisis intensify, especially in the developing world.
#Coronavirus crisis poses serious social & economic threat to developing economies.@UNDP is helping countries prepare, respond & recover from the #COVID19 pandemic, focusing particularly on the most vulnerable. https://t.co/ayLYbCe7Ok pic.twitter.com/x7jQglVsOo
— United Nations (@UN) April 3, 2020
Developing economies of countries that were already struggling with living conditions and scarce resources are now dreading even a more challenging economic position. Even though they weren't the worst-hit countries in the wake of the coronavirus pandemic, emergent nations had to live through several forms of lockdowns to avoid overwhelming their already vulnerable health systems, which led to slowing production and a pause in non-essential economic activities.
Countries that weigh heavily on exporting their products to other nations have been in a particularly risky position, as international trade has been halted over the last few weeks, which, for these countries, meant a drastic decline in revenue.
Additionally, economies that highly depend on international investments have witnessed mass cancellations of projects, and laying off thousands of employees who are now an extra burden, the national economy can't afford to help.
Even for countries with a considerable population of immigrants abroad, responsible for the livelihood of several families, challenges have become even harder, with thousands of people losing their jobs and losing the ability to send money back home.
Increasing restrictions to exports exacerbate the shortages and drive prices up: the 20 developing countries with the highest number of COVID-19 cases derive 80 percent of critical COVID-19 products from just five economies: https://t.co/8uabbmcRt3#Tanzania #Africa pic.twitter.com/siau7loKHn
— World Bank Tanzania (@WBTanzania) April 24, 2020
It's no secret that lots of developing economies have been already burdened with billions of dollars in debt for years. The post-pandemic reality could result in double those numbers as governments will have to apply for more loans in order to be able to run their countries over the next few years of the potential global recession.
Last week, the United Nations Conference on Trade and Development (UNCTAD) called for a global debt deal to relieve struggling economies.
In their plan, the UNCTAD proposed cancellation of around $1 trillion of debt owed by developing countries, to help these economies overcome the consequences of the pandemic, and to ensure that these countries are able to support their health systems in preparation for a possible second wave of COVID-19 outbreak next fall.
According to Reuters, "UNCTAD estimated liquidity and financing requirements of developing nations, due to the pandemic, amount to at least $2.5 trillion."
