Global markets and spirits are up with the news that several covid-19 vaccines have shown to be more than 90% effective in late-stage clinical trials.
But while there is growing confidence that an end to the health pandemic is in sight, an UNCTAD report 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.
The report, Impact of the Covid-19 Pandemic on Trade and Development: Transitioning to a New Normal, provides a comprehensive assessment of the economic knock-ons, projecting that the global economy will contract by a staggering 4.3% in 2020 and warning that the crisis could send an additional 130 million people into extreme poverty.
The way the world economy is set up is partly to blame for the disproportionate impact on the world’s poorest, who lack the resources necessary to respond to shocks such as COVID-19, the report says.
"The covid-19 pandemic has gravely wounded the world economy with serious consequences for everyone," UNCTAD Secretary-General Mukhisa Kituyi said.
"Moving rapidly across borders, along the principal arteries of the global economy, the spread of the virus has benefited from the underlying interconnectedness – and frailties – of globalization, catapulting a global health crisis into a global economic shock that has hit the most vulnerable the hardest," he stated.
The report finds the UN Sustainable Development Agenda 2030 will be derailed unless immediate policy actions are taken, especially in favour of the poorest.
A better recovery must centre on renewed trade policy that tackles the twin challenges of market concentration and environmental impact, the report says.
It also notes there is a pressing need to reshape global production networks to be more green, inclusive, and sustainable while simultaneously resetting the multilateral system to support the most vulnerable and deliver on climate action.
In the report, UNCTAD tracks the deepening impact of the virus on all areas of the world economy and maps how the crisis has affected global trade, investment, production, employment and, ultimately, individual livelihoods.
It finds that the pandemic’s impact has been asymmetric and tilted towards the most vulnerable, both within and across countries, affecting disproportionately low-income households, migrants, informal workers and women, the report says.
Global poverty is on the rise for the first time since the 1998 Asian financial crisis. In 1990, the global poverty rate was 35.9%. By 2018 it had been curtailed to 8.6% but has already inched up to 8.8% this year and will likely rise throughout 2021.
Additionally, covid-19 has had an excessive effect on two sectors – tourism and micro, small and medium-sized enterprises – which employ many vulnerable groups.