UNCTAD said in a new report that the developing countries would need a $2.5 trillion support package this year to face the economic crisis caused by the pandemic.
Their economies will take “enormous hit” from high capital outflows, lost export earnings due to falling commodity prices and currency depreciation, with an overall impact likely worse than the 2008 crisis, the UNCTAD said.
According to the report titled ‘The Covid-19 Shock to Developing Countries’, the required measures included a $1 trillion liquidity injection and a $1 trillion debt relief package, another $500 million for emergency health services and related programmes on top of capital controls.
“Sub-Saharan African countries will be among the hardest hit alongside others, including Pakistan and Argentina,” said Richard Kozul-Wright, director of globalisation and development strategies at UNCTAD, who oversaw the report.
Referring to a “frightening combination” of factors, including mounting debts, a potential deflationary spiral and a major health crisis, Kozul-Wright said that according to conservative estimates, the coronavirus would cause a $2-$3 trillion financing deficit over this year and next.
“The international institutions have to take these sorts of proposals very, very seriously as it’s the only way that we can see to prevent the damage already taking place and which will get worse,” the UNCTAD director stressed.
The G-20 nations have vowed assistance worth over $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic”. “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,” Kozul-Wright said.
As EurAsian Times reported earlier, the Asian Development Bank (ADB) estimates Pakistan to suffer a loss of $5 billion, of which $1.5 billion loss will be incurred in the agriculture and mining sector, $1.94 billion in business and trade, $253.7 million in hotel and restaurants, $671 million in light and heavy engineering, and $565.6 million loss in transport services.
The report also highlights that this loss would plunge Pakistan’s GDP by at least 1.57 per cent and trigger 9,46,000 job losses.