ADDIS ABABA – The UN predicts that global economic output is expected to slash by $8.5 trillion over the next two yours and 2020’s global economy is projected to contract by 3.2 percent due to COVID-19.
The United Nations World Economic Situation and Prospects (WESP) mid-2020 report released this week also forecasts that estimated 34.4 million people are to fall below extreme poverty line due to the effect of the pandemic.
According to UN Ethiopia Branch statement sent to The Ethiopian Herald, the global economy is expected to lose $8.5 trillion in output over the next two years due to the COVID-19 pandemic, wiping out nearly all gains of the previous four years.
“The sharp economic contraction, which marks the sharpest contraction since the Great Depression in the 1930s, comes on top of anaemic economic forecasts of only 2.1 per cent at the start of the year” the statement pointed out.
The GDP growth in developed economies is expected to plunge to -5.0 per cent in 2020, the report noted. The report also forecasted world trade to contract by 15 per cent in 2020 due to sharp reduction in global demand and disruption in global supply.
“Nearly 90 per cent of the world economy has been under some form of lockdown, disrupting supply chains, depressing consumer demand and putting millions out of work. Under the baseline scenario, the developed economies are expected to contract by 5.0 per cent in 2020, while the output of developing countries will shrink by 0.7 per cent”, the report stated.
Accordingly, the pandemic will exacerbate poverty and inequality in the world and the pandemic will cause an estimated 34.4 million people to fall below the extreme poverty in 2020, of which 56 percent in Africa.
The pandemic, which is disproportionately hurting low-skilled and low-wage jobs will widen economic inequality within and between countries, the statement reiterated. This may lead for an additional 130 million people to join to the ranks of people living in extreme poverty by 2030.
UN advised strong global cooperation, large fiscal and monetary stimulus measures and extends financial assistance for the developed countries for the quick recovery of the world economy. The depth and severity of the crises foreshadows a slow and painful recovery, it noted.
The Ethiopian Herald May 16/2020
BY DARGIE KAHSAY
