Except India & China, world to slip into recession: UN

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United Nations, March 31

The world economy will go into recession this year with a predicted loss of trillions of dollars of global income due to coronavirus pandemic, spelling serious trouble for developing countries with the likely exception of India and China, according to a latest UN trade report.

With two-thirds of the world population living in developing countries facing unprecedented economic damage due to Covid-19 crisis, the UN is calling for a $2.5 trillion rescue package for these nations.

According to a new analysis from the United Nations Conference on Trade and Development (UNCTAD) titled “The Covid-19 Shock to Developing Countries: Towards a ‘whatever it takes’ programme for the two-thirds of the world’s population being left behind”, commodity-rich exporting countries will face a $2 trillion to $3 trillion drop in investment from overseas over the next two years.

The organisation said advanced economies and China have put together massive government packages which, according to the Group of 20 leading economies (G20), will extend a $5 trillion lifeline to their economies.

“This represents an unprecedented response to an unprecedented crisis, which will attenuate the extent of the shock physically, economically and psychologically,” it said.

It said while full details of these stimulus packages were yet to be unpacked, an initial assessment by UNCTAD estimated that they would translate to a $1 trillion to $2 trillion injection of demand into the major G20 economies and two percentage point turnaround in global output.

“Even so, the world economy will go into recession this year with a predicted loss of global income in trillions of dollars. This will spell serious trouble for developing countries, with the likely exception of China and the possible exception of India,” the UNCTAD said.

The report, however, did not give a detailed explanation as to why and how India and China would be the exceptions. — PTI