A study, United Nations World Economic Situation and Prospects has revealed that COVID 19 will cost the global economy to the tune of $8.5 trillion in total output thereby pushing 130 million people into extreme poverty with 56% of this increase occurring in African countries.
The study which was released on Wednesday also projected a 3.2% reduction in global Gross Domestic Product, GDP for 2020. The projections follow the IMF World Economic Outlook report in April, which anticipated a 3% decline this year.
According to Hamid Rashid, lead author of the report governments must protect jobs and prevent a further rise in income inequality.
“An additional 130 million people may join the ranks of people living in extreme poverty by 2030, dealing a huge blow to global efforts for eradicating extreme poverty and hunger. The lesson we have learnt from the last crisis is that fiscal and monetary stimulus measures do not necessarily boost productive investments. Governments must protect jobs and prevent a further rise in income inequality because the pandemic will disproportionately hurt those holding low-skilled, low-wage jobs while leaving higher-skilled jobs less affected” he said.
The study further added that the pandemic may accelerate digitalization and automation, which could eliminate many existing jobs, as a result, the net wage and employment effects could be negative, further aggravating income inequality.
Global growth is expected to rebound by 3.4% in 2021, according to the UN study.
Recall that on Tuesday, International Monetary Fund Managing Director Kristalina Georgieva said that the economic forecasts may be further downgraded next month based on weak data since the mid-April IMF report.
