December 16, 2020 (MLN): At this time in 2019, there was no way of knowing what the approaching year of 2020 would bring. Concepts such as “lockdowns,” “mask mandates” and “social distancing” were unknown to most of us. Today they are part of our everyday language as the COVID-19 pandemic continues to impact all aspects of our lives.

A detailed assessment of the impact of Covid-19 on the global economy during the outgoing year 2020 can be seen through different charts and graphics published by World Bank Group on its blog on Monday.

There is no doubt that COVID-19 eruption is one of many events that have made 2020 a year like no other. Over the past 12 months, the pandemic has harmed the poor and vulnerable the most, and it is threatening to push millions more into poverty. According to World Bank, Covid-19 has pushed an additional 88 million people into extreme poverty this year and that figure is just a baseline. In a worst-case scenario, the figure could be as high as 115 million.

The restrictions enacted to contain the spread of Covid-19, have had an enormous impact on economic growth, as it has accelerated economic downturn. In a June edition of the Global Economic Prospects it was forecasted that the global economy as well as per capita incomes would shrink this year – pushing millions into extreme poverty.

This economic fallout is hampering countries’ ability to respond effectively to the pandemic’s health and economic effects. Even before the spread of covid-19, almost half of the low-income countries were already in debt distress or at a high risk of it. In view of this, World Bank and IMF in April, called for the suspension of debt-service payments for the poorest countries to allow them to focus resources on fighting the pandemic. Of course, Debt Service Suspension Initiative (DSSI) has enabled these countries to free-up billions of dollars for their COVID-19 response, but it will impose a heavy burden on bilateral creditors for the years to come, and quick action to reduce debt will be needed to avoid another lost decade, says World Bank.

The animation below shows the shifting composition of annual debt-service obligations that low-income countries owe to their bilateral creditors-from 2020 through 2022. It reflects projected debt service payments on external debt to official bilateral creditors (TDS, current US$, millions).

In view of the above, shedding some light on flow of Remittances are important here, as it plays a significant role in alleviating poverty and sustaining growth. Just last year, as per World Bank, these flows were on par with foreign direct investment and official development assistance (government-to-government aid). But COVID-19 has spurred a dramatic reversal, with World Bank’s latest forecasts finding that remittances will decline 14% by the end of 2021. All regions can expect a drop, with Europe and Central Asia seeing the steepest fall. Associated with these declines, the number of international migrants is likely to fall in 2020 – for the first time in modern history – as new migration has slowed and return migration has increased, World Bank highlighted.

The pandemic slowdown has deeply impacted businesses and Job. However, the survey conducted by World Bank and Partners between May and August presented a flicker of good news as the responses showed that many of the firms around the world– especially micro, small, and medium enterprises (MSMEs) in the developing world, which were under intense strain, with more than half either in arrears or likely to fall into arrears shortly, were retaining staff, hoping to keep them on board as they ride out the downturn and more than a third of companies have increased the use of digital technology to adapt the crises.

The pandemic also posed serious threat to health care, as according to World Bank, tens of millions of people are being pushed into extreme poverty by health spending. “The costly spending causes financial hardship for more than 900 million people and pushes nearly 90 million people into extreme poverty every year – a dynamic almost certainly exacerbated by the pandemic,” World Bank said.

In addition to increase in poverty and unemployment, pandemic has increased food insecurity globally which is affecting people in both urban and rural settings. According to World Development Indicators released by World Bank Group, the number of people who were undernourished (an indicator that tracks how many people fail to access sufficient calories) was increasing before the pandemic emerged, after decades of decline, however, Covid-19 has exacerbated this already worrying trend.

Since the pandemic has had wide-ranging impact on nearly every aspect of development, the full scale of the pandemic will only be known in years to come. In this respect, the World Bank has increased its support for the countries to boost resilience against the mounting impacts of Covid-19 and to navigate the global community out of this truly global crisis.

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