In a new report, the United Nations Conference on Trade and Development (UNCTAD) says COVID-19 poses an enormous challenge to global development aspirations.
UNCTAD provides a comprehensive assessment of the economic impact of the sanitary crisis, projecting that the global economy will contract by 4.3% in 2020.
Inequalities and vulnerabilities will worsen as the effects of the pandemic undermine progress on poverty and other important sustainable development goals.
The UN trade agency charts a roadmap for more inclusive trade and economic development, emphasizing the need to reshape global production networks.
But while there is growing confidence that an end to the health pandemic is in sight, UNCTAD warns that a viable vaccine will not halt the spread of economic damage, which will be felt long into the future, especially by the poorest and most vulnerable.
Interestingly, the Sustainable Development Goals are now more important than ever. The 2030 Agenda remains the only choice for a more prosperous future for people and planet.
It is a stark reminder of shared vulnerability and demonstrates the need for real change. Nonetheless, it can also be an inflection point to alter course and build a more resilient new normal. Much will depend on the policies adopted and ability to coordinate, both at the international and national levels.
Thus, despite the grim outlook, it is still possible to turn COVID-19 into the finest hour of the United Nations and build a more inclusive, resilient and sustainable future.
Since the outbreak of the COVID-19, more than one million people have lost their lives due to the pandemic, and the global economy is expected to contract by a staggering 4.3 per cent in 2020.
Millions of jobs have already been lost, millions of livelihoods are at risk, and an estimated additional 130 million people will be living in extreme poverty if the crisis persists.
These are grim figures that reflect the immense challenges and human suffering caused by this pandemic. Nor is an end to COVID-19 yet in sight. In many countries, the number of new COVID-19 cases is rising at an alarming rate and, for many, a second wave is already an unwelcome reality.
Much uncertainty remains about how and when the pandemic will run its course, but the unprecedented economic shock generated by the global health emergency has already sharply exposed the global economy’s pre-existing weaknesses, severely setting back development progress around the world.
While nearly all spheres of life have been affected by the pandemic and the resulting socioeconomic impacts, the focus of this report is on the pandemic’s massive consequences for trade and development.
Moving rapidly along the travel connections and transport corridors that make up the principal arteries of the global economy, the spread of the virus has benefited from the underlying interconnectedness – and frailties – of globalisation.
Coming against a backdrop of already fragile economic conditions, the pandemic has created disruptions on an unprecedented scale and uncovered the vulnerability of many already disadvantaged households and sectors.
COVID-19 has spurred on a number of already visible trends, magnifying some obstacles to development, but has also opened up new opportunities for trade and development.
In this report, selected aspects of a “new normal” are discussed, as well as how COVID-19 may be a game-changer for several persistent and emerging trade and development challenges in areas that UNCTAD has been examining in depth.
To be better equipped to deal with the crisis and build a more resilient, inclusive and sustainable future, policy actions are also described that UNCTAD member states can take to support ongoing responses to COVID-19 and an eventual recovery from the pandemic.
In chapter 1, how the COVID-19 pandemic has shaken the global trade and development landscape to its core is outlined. A bird’s eye view is given of how the global health emergency developed into a global economic shock.
There is a close look at the immediate impacts on global growth, international trade and foreign direct investment and how the crisis has affected global production, employment and ultimately individual livelihoods.
Touching on a wide range of indicators, the report highlights that the pandemic’s impact is asymmetric, and tilted towards the most vulnerable, both within, and across countries.
The analysis in chapter 2 centres around how the disruption caused by COVID-19 has had real and disproportionate consequences on vulnerable and disadvantaged low-income households, migrants, workers in the informal sector and, often, women.
Especially in the developing world, many of these populations are not protected by social safety nets and yet are particularly affected by soaring unemployment. The impact of the pandemic on these groups is examined with an eye to strengthening their resilience, through productive capacities, broader social protection and gender-sensitive policy responses.
The impact of COVID-19 on two sectors that have been particularly affected and employ many vulnerable groups – tourism and microenterprises and small and medium-sized enterprises – is also analysed.
In chapter 3, there is a shift to financing the immediate response to the crisis and recovery from the pandemic in the most vulnerable countries.
The impact of the crisis on external finance is examined, with a discussion on how official development assistance and remittances play a key role for many of the poorest and most vulnerable countries and how debt sustainability has become a challenge for a growing number of countries.
As shown in the chapter, the pandemic is giving rise to unsustainable debt burdens in many developing countries, further endangering their efforts at mobilizing sufficient resources to achieve the Sustainable Development Goals.
Policy implications are also discussed regarding improved fiscal space and liquidity support and the need for broader and bolder action, particularly in the area of sovereign debt.
The perspective is broadened, beyond the most vulnerable, in chapter 4 by exploring the impact of the crisis on global value chains and how the pandemic presents a major challenge for international production, especially in combination with ongoing technological change, fragmentation of international economic policymaking and sustainable development imperatives.
It is argued that COVID-19 can be a catalyst for more resilient global and regional production networks that support the building of productive capacities for structural transformation, diversification and sustainability.
In analysing the impact of the pandemic on international production, related investment policy and sustainability issues are examined. Also examined is how science, technology and innovation policies employed in the pandemic response can be harnessed by developing countries to augment their innovation and productive capacities.
The recent acceleration in digitalisation and the impact of the COVID-19 crisis on electronic commerce are considered. International transport and trade facilitation are also discussed as important transmission channels that can exacerbate disruptions but also enable a more sustainable and resilient recovery.
In chapter 5, how international trade helped transmit shocks originating in major economies quickly to developing regions is looked at, leading to disproportionately negative economic shocks in developing countries.
How the market disruptions caused by the pandemic affected those with limited market power the most, such as small and medium-sized enterprises and entrepreneurs, and seriously impacted all consumers are examined.
The consideration is that, in view of fostering economic recovery, international trade must also play a key role.
It is argued that countries can achieve a stronger, more inclusive and greener economic recovery by adopting an appropriate mix of trade policy, competition and consumer protection policies and environmental policy.
The pandemic requires the United Nations to take appropriate actions to address these new challenges and opportunities. UNCTAD took action early in the pandemic, uniting with entities across the United Nations development system, to prepare a socioeconomic response framework to “recover better”.
The report contributes to this objective, focusing on analysis and policy actions in the area of trade and development. Many of the policy actions described in this report ensure that trade and related aspects, such as foreign direct investment, technology and finance, are part of inclusive and sustainable solutions.
With the United Nations celebrating its 75th anniversary this year, international cooperation and solidarity are and will remain critical to deal with the COVID-19 crisis, in order to avoid a lost decade and maintain hopes for the 2030 Agenda for Sustainable Development.