Impact of the Coronavirus Disease will leave a $10tn hole in the global economy, the United Nations Conference on Trade and Development stated a report on Thursday.
UNCTAD said, although the global economy could expand by 4.7 per cent in 2021, it would nonetheless wind up “short of $10tn,” about twice Japan’s Gross Domestic Product.
“Last year, the global economy posted its sharpest annual drop in output since statistics on aggregate economic activity were introduced in the early 1940s,” UNCTAD said.
While wealthy economies have proposed huge damage-limitation fiscal spending, such as the United States’ $1.9tn “stimulus package,” and China returned to growth in late 2020, people in smaller and poorer countries are struggling, UNCTAD warned.
It argued that developing countries were bearing the brunt of the downturn due to “limited fiscal space, tightening balance of payments constraints and inadequate international support,’’ leading to some of the largest personal income drops relative to GDP.
“Even a small downturn in economic activity can be devastating,” UNCTAD said.
It described the fallout of pandemic restrictions as predictably severe in developing economies such as the Philippines and Malaysia.
UNCTAD also upped its earlier prediction of 4.3 per cent global growth in 2021, citing a possible “stronger recovery in the U.S.”
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