COVID-19 Impact on Global Economy
By Shaikh Moazam Khan
The world has seen various recessions in last couple of decades. Those recessions had brought the world at standstill where it was projected that some countries won’t be able to run their routine affairs and activities. The third world countries had been the target of global recessions. The developed countries had survived somehow. Now, this time world is facing one of the toughest economic dilemma, which is the result pandemic coronavirus globally known as COVID-19. This pandemic has halted almost all economic activity globally. The clouds of one more global recession period are looming over the world. The third world or developing countries may be the next prey of this pandemic as their economies are likely to face unbearable jolts. Overall growth rate of the entire world is declining and being projected at lowest point. These are the sign of toughest future of the global economy. The tremors of this recession are likely to stay for longer period of time.
Third world and developing countries are looking towards developed states for economic support amid the outbreak of COVID-19 pandemic. Unfortunately, due to the effects/ division in global economic and strategic world order due to the outbreak of COVID-19, the developed states are not seems in a mood to facilitate third world. However, in that case, Prime Minister Imran Khan’s appeal to international community especially G-20 states is being viewed as a major breakthrough for the dwindling economies of third world states. Prime Minister Imran Khan posted an appeal on social media in the form of a video message, urging the international community, the United Nations Security General (UNSG), and the international financial institutions to help the developing nations in their fight against the coronavirus disease (COVID-19) pandemic, which is spreading like wildfire across the world.
Prime Minister Imran Khan also urged the global community to launch an initiative to give debt relief to developing countries that are fighting the novel coronavirus. His views received applause globally and G-20 states agreed to reschedule their loans and economic relief plans for the developing states. The United Nations’ Secretary General António Guterres also endorsed PM Imarn Khan’s proposal of debt relief for developing states. In addition to this, international lending institutions such as International Monitory Fund (IMF) and the World Bank (WB) announced to defer the receiving their loan instalments till May 2021, which is likely to boost the economic structure of already dwindling economies of developing states. The G-20 group announced to form the group of 76 developing countries to give them direct economic and financial benefits.
Pakistan is also included in that group. These acts of global community are commendable. But only these acts are not enough. The developed states needs to revisit their policies on the debts which they have given to the poor states. They should waive off the loans of at least those states who are unable to repay their debts due to their dwindling economy outbreak of COVID-19 pandemic. The United Nations’ Secratery Genral also made a statement regarding global relief efforts and asked monetary organizations to provide relief to developing nations.
The developing states, due to their poor health and economic systems, are already facing huge blow due to the COVID-19 and it will be very difficult them to recover their economies in near future. In that case, the repayment of foreign debts may jeopardize their economic system. Therefore, there should be more economic relief packages from global community for these states. If these states unable to recover themselves from the economic slowdown and COVID-19, the entire economic world order will have to bear the consequences. This is the best time for global unity apart from the countries’ political, economic and strategic objectives. The United Nations, other international organizations and international monitory institution must sit together to devise post-COVID-19 pandemic economic plan to run the international political economy. The IMF and World Bank are already doing enough to facilitate the developing states.
IMF is currently holding a board meeting to discuss details of relief that might be provided to Pakistan in order for the country to contain the spread of COVID 19. However, to maintain the balance of payment after May 2021, the IMF needs to revise its interest rates as well because the developing states won’t be in a position to pay huge percentage of interest. The extension of IMF’s relief package must be reached to the starving states in Africa too. There are looming threats of starvations in some African states.
This is the time for the world to set aside their political, economic and strategic differences/ rivalries and join hands to eradicate the pandemic. Accusing any state of spreading the virus or chaos is not the solution of this problem as thousands of people dying and being infected on daily basis. This situation is giving an ample reasons to the states to mend the bilateral differences and rivalries. Humanity must come first apart from the political approach of any state. If the world unites, the ultimate winner would be the entire community and humanity. So, these efforts must be launched.