‘There are clear indications that things will get much worse for developing economies before they get better’
THE WORLD’S developing countries need a support package worth $2.5 trillion to weather the economic fallout of the coronavirus pandemic, the UN Conference on Trade and Development (UNCTAD) said on Monday in Geneva.
This is in the same order of magnitude as the national $2 billion stimulus package that US President Donald Trump signed last week.
UNCTAD, a UN think tank and aid body, said that the shock wave from the pandemic is dramatic, even in comparison with the 2008 financial crisis.
In the two-and-a-half months since the virus was confirmed to have spread beyond China, developing countries have been hit by capital outflows, currency depreciations, falling commodity prices and dwindling tourism revenues, according to UNCTAD economists.
“There are clear indications that things will get much worse for developing economies before they get better,” UNCTAD secretary general Mukhisa Kituyi said in a statement.
The G20 group of major economies last week vowed to inject more than $5 trillion into the global economy to limit the impact of the coronavirus pandemic.
While the G20 efforts are targeted at the group’s own firms and households, the rest of the world needs additional help, UNCTAD chief economist Richard Kozul-Wright said.
“If G20 leaders are to stick to their commitment of ‘a global response in the spirit of solidarity’, there must be commensurate action for the six billion people living outside the core G20 economies,” he said.
UNCTAD called for $1 trillion of liquidity aid, $1 trillion in the form of cancelled debts, and $500 billion to fund economic recovery.