The global economic shutdown is ravaging the developing world with a humanitarian disaster unlikely to begin to abate until advanced economies have reopened, said World Bank president David Malpass.
The shutdown will cast 60 million more people into poverty, the bank says, defining poverty as living on $1.90 or less a day. Hundreds of millions of others are at risk of losing their jobs, the bank predicts.
The shutdown is particularly hard on emerging nations because their economies are dependent on tourism and resource exports, both of which have come to a halt since February. These nations then have even less money to deploy to care for their own COVID patients and to service their already-high foreign debts.
The shutdown’s human cost is “devastating,” especially in the poorest countries, Malpass said, in part because the shutdown will have knock-on effects beyond the virus, ranging from reluctant foreign investors to malnutrition among children.
The bank foresees the global economy contracting by 5 percent this year, negating the past three years’ progress in reducing the number of the world’s poor.
More than 100 countries, holding 70 percent of the world’s population, have applied to the World Bank’s $160-billion assistance fund but “more [money] is needed,” Malpass said.
He expressed frustration that relatively few commercial lenders have heeded the G20 economic group’s April call to suspend loan payments for 73 of the poorest countries.
Fourteen nations have asked for payment suspensions, 23 are preparing to do so, and 17 are considering it, he noted.
The countries may be hoping “that commercial credit markets will suddenly reopen in 2020” but “the likelihood is that the pandemic and economic shutdown in advanced economies will have long-lasting effects,” he warned.
Malpass urged poor countries to adopt economic policies that will draw foreign investment, boost domestic investment, and attract remittances from expatriates.
