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A new report released by the United Nations on Wednesday emphasizes the different economic recovery among countries and puts forward a new urgency that as the world recovers from the COVID-19 interruption, rich countries have not taken enough measures to help poor countries fall further behind.
Inumanak, an international political economy expert at the Cato Institute, a liberal think tank in Washington, DC, said: “It’s really frustrating to see how the response to the pandemic has become quite chaotic.”
She told Al Jazeera: “During the financial crisis, all developed countries are declaring to avoid protectionism, but during the pandemic, we have seen remarks about doubling borders, turning inward, and promoting self-reliance.”
A new report shows that in most parts of the global economy, the damage caused by the COVID-19 crisis has exceeded the Great Recession of 2007-2009, but the impact on developing countries is particularly severe. report (PDF) From the United Nations Conference on Trade and Development (UNCTAD) released on Wednesday.
The report found that due to the coronavirus crisis, the number of poor in developing countries (excluding China) will drop by as much as 8 trillion US dollars by 2025.
The total cost of delayed vaccination—in terms of lost revenue—will reach $2.3 trillion, most of which will be borne by developing countries.
Even assuming no further shocks, it may not be until 2030 to return to the pre-pandemic income trend-this is the weakest growth rate since the end of World War II.
The economic impact of the pandemic has reduced the financial resources of many developing countries and increased their debt burdens. For countries at the forefront of climate change, this cocktail may prevent them from achieving growth and investment in the next few years.
Richard Kozul-Wright, UNCTAD’s Director of Globalization and Development Strategy, told Al Jazeera: “The danger of losing a decade in the future is still very real.” “So far, the discussions surrounding the reform of the multilateral system after the financial crisis It hasn’t happened yet, although the system clearly has shortcomings.”
He added that the debt service suspension initiative of the Group of 20 (G20) countries has provided about 13 billion U.S. dollars to eligible developing countries, but it is “far from what is needed”.
Last month, the International Monetary Fund (IMF) approved a new special drawing right of US$650 billion-Special Drawing Rights-the reserve currency of the IMF, which can be converted into hard currencies such as the US dollar and can provide assistance for many Poorer countries provide much-needed funding. The troubled country received the necessary cash.
A United Nations official told Al Jazeera that the G20’s debt service suspension plan has provided about 13 billion U.S. dollars in funding to eligible developing countries, but “is far from what is needed to help these countries get rid of the coronavirus lockdown.” [File: Stringer/Reuters]But most of the new SDR allocation will be attributed to richer countries, because SDR is allocated according to a country’s IMF quota, which in turn depends on a country’s position in the global economy.
“If developing countries are to be able to mobilize domestic resources to achieve the Sustainable Development Goals, we still need large-scale debt relief and cancellation [Sustainable Development Goals],” Kozul-Wright told Al Jazeera.
The Sustainable Development Goals are 17 goals — with a focus on education, health, nutrition, and women’s rights — and UN member states have pledged to achieve these goals by 2030. In essence, it is a global development blueprint, which aims to enable the least developed countries to escape poverty forever.
“Doing so will require reforms to the existing multilateral financial architecture, and developed economies need to discuss what this may involve with developing countries,” Kozul-Wright said.
Inequality: Decades of brewing?
The UNCTAD report argues that even before the coronavirus pandemic shut down the economy and halted global trade, four decades of shrinking government services, growing inequality, and impunity of financial and corporate elites had already caused the global economy. critical hit.
According to the report, the post-blockade growth is mainly concentrated in North America, which has close trade ties, strong fiscal stimulus and loose currencies.
The total cost of delayed coronavirus vaccination is estimated to reach US$2.3 trillion, most of which will be borne by developing countries [File: Siphiwe Sibeko/Reuters]William Millberg, dean of the New School of Social Studies and professor of economics, told Al Jazeera: “We have seen places where the pandemic leads to more severe economic collapse, such as in developing countries rather than developed countries.”
“And we have seen a recovery, in Europe, maybe in the United States, in China, but we have not seen a recovery in developing countries.”
This year marks the 40th anniversary of the release of the UNCTAD Annual Report, which was first released in 1981 when the late US President Ronald Reagan was in office. Reagan was a proponent of neoliberal economic policies and free markets, and he had promised to curb rapid inflation at home. But Kozul-Wright of UNCTAD said that this localized agenda has global implications.
Curbing inflation means raising U.S. interest rates, thereby increasing the value of the U.S. dollar against other currencies. This makes it harder for poorer countries to repay their dollar-denominated debts, which leads to the extreme austerity measures of “lost decade” growth and development for the troubled countries.
During the global financial crisis, this cruel cycle of debt and austerity will once again prevail.
“global economic crisis [of 2007-2009] Exposing the danger of this hyper-globalization system, despite the G20 and other local commitments to reform, the winners of the system resist and push for austerity policies to adjust the system in a way that benefits them,” Kozul-Wright told Al Jazeera.
Biden: A bolder move or a “light of protectionism”?
UNCTAD stated that although global growth this year is expected to reach 5.3%, the fastest growth rate in nearly half a century, the global situation after 2021 is still extremely uncertain, even in advanced economies.
But the tide may be changing.
Since taking office nine months ago, US President Joe Biden (Joe Biden) has surpassed historical levels Stimulate And expand social protection programs, such as Child tax credit with Food stamp benefits.
U.S. President Joe Biden delivered a speech at the White House in Washington, D.C. on the child tax credit and tax relief [File: Tom Brenner/Reuters]UNCTAD stated that these developments are “funded through more progressive taxes” and break the “long-term trend of shifting income to the top of the income distribution and risk shifting to the bottom of the income distribution”.
“We have realized that modern capitalism may be close to a breakthrough in inequality and environmental issues. I think Biden’s policy stance is very bold,” said Milberg, who is also the co-director of the Heilbronn Center. Capitalism in the new school.
“The Democratic Party has surrendered to neoliberal positions on many economic issues, and the current administration recognizes that this is not enough,” he added.
At the international level, Biden promoted the world’s lowest corporate tax rate and abandoning intellectual property rights related to coronavirus vaccines in the World Trade Organization to improve vaccine fairness.
“What remains to be resolved is the U.S.-China trade relationship. If this problem can be resolved through collaboration and growth, it will be very promising, rather than retreating and continuing to rely on a more conflicting relationship,” Millberg told Al Jazeera.
But some economists say that Biden has stalled on trade.
“We have seen the trade policy and the’light of protectionism’ in the Trump era,” said Manak of the Cato Institute. “We have not seen any suggestions for changes to China’s attitude.”
Manak said that one of the positive things brought about by the trade policy of former US President Donald Trump’s administration is his trade agreement with Kenya, which aims to promote trade with Africa, adding that the plan has run into a wall.
“Another way to help developing countries is to trade with them,” she said. “But we saw the retreat.”
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