Governments around the world have till now spent $10 trillion in fiscal actions to respond to the novel coronavirus pandemic and its economic fallout, International Monetary Fund Managing Director Kristalina Georgieva said on Thursday. However, more funds will be needed to combat the pandemic, she added.
Georgieva added that investments should focus on improving access to health care and education, strengthening climate protections and broadening the access of low-income households and small business to financial products and technology, she wrote. "The COVID-19 crisis is inflicting the most pain on those who are already most vulnerable. This calamity could lead to a significant rise in income inequality," she said.
According to various studies, the economic shrinking due to coronavirus-induced lockdown can result in 100 million people falling into extreme poverty as a result of the crisis.
The coronavirus disease has infected nearly 7.4 million people around the world and 415,545 have died. The World Bank this week forecast the coronavirus would shrink global output by 5.2 per cent in 2020, the deepest contraction since World War Two.
According to a World Bank report, economic activity among advanced economies is anticipated to shrink by seven per cent in 2020 as domestic demand and supply, trade and finance have been severely disrupted.
Emerging Markets and Developing Economies (EMDEs) are expected to shrink by 2.5 per cent this year, their first contraction as a group in at least 60 years, it said. Per capita incomes are expected to decline by 3.6 per cent, which will tip millions of people into extreme poverty this year, according to the report.
The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports and external financing, it said.
While the magnitude of the disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development, the bank said.