The United Nations Conference on Trade and Development (UNCTAD) has estimated that the global economy would shed $10 trillion due to the coronavirus pandemic and lockdowns in 2021, despite expectations that it would grow by 4.7 per cent during this period.
UNCTAD in its latest projection stated that the estimated shortfall in the global economy represents about twice Japan’s Gross Domestic Product (GDP), compared to if the pandemic had never happened.
According to UNCAD, last year, the global economy posted its sharpest annual drop in output since statistics on aggregate economic activity were introduced in the early 1940s.
While wealthy economies have proposed huge damage-limitation fiscal spending, such as the $1.9-trillion “stimulus package,” and while China returned to growth in late 2020, people in smaller and poorer countries are struggling, UNCTAD warned.
Developing countries are 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 activities can be devastating,” UNCTAD said, describing fallout from pandemic restrictions as predictably severe in developing economies such as the Philippines and Malaysia.”
On Thursday, UNCTAD also upped its earlier prediction of 4.3-per-cent global growth in 2021, citing a possible “stronger recovery in the United States.”
In January, the World Bank said the global economy could grow by 4 per cent in 2021, while the International Monetary Fund opted for a rosier 5.5 per cent.