According to a UN report released Wednesday, May 13, the global economy is now projected to contract by 3.2% for 2020 as a result of the COVID-19 global pandemic.
Further for 2020 according to the United Nations World Economic Situation and Prospects (WESP) mid-2020 report, global trade is forecast to shrink by nearly 15% due to significant reduction in global demand along with the disruptions in global supply chains.
Over the next two years, the pandemic is anticipated to drastically cut global economic output by USD8.5 trillion—essentially wiping out nearly all major gains of the previous four years.
The forecast came on top of slim economic forecasts of 2.1% at the beginning of 2020 which highlights the sharpest contraction since the great depression of the 1930’s.
For developed economies, the report estimates that the growth will plunge to 5% this year before rising back up next year.
“A modest, 3.4 percent growth — barely enough to make up for the lost output — is expected in 2021,” the report said. Further noting that there will be a decrease of 0.7% for developing countries.
Over 34 million people are estimated to go under the extreme poverty line in 2020 due to the pandemic with more than half of this is happening in African countries.
Another 130 million people are also vulnerable to living in extreme poverty by 2030 which deals an extraordinary punch to all of the valiant, global efforts for eradicating extreme poverty and hunger.
The already widening income inequality all across the World is predominantly hurting low-skilled, low-wage jobs, while leaving higher-skilled jobs less impacted.
Elliott Harris, UN assistant secretary-general for economic development, noted that in addition to public health measures undertaken, the ability of nations to protect jobs and incomes will be critical for recovery from the crisis. Additionally, the report expects to see an acceleration of digitalization and automation which will likely eliminate many existing jobs but create new ones in a digitalizing economy.