By Khalid Taimur Akram & Shakeel Ahmad Ramay
World has been jolted by COVID-19 pandemic. It was un-expected and sudden. The impacts are multidimensional and multifaceted. The severity of impacts is unfolding in a time wise manner. The first victim was economy which was immediately stuck and bearing the full wrath of impacts. It is shrinking. World Bank predicted that the economy will be contracted by 5.2 percent in 2020. Foreign direct investment is exhibiting a negative trend. The United Nations Conference on Trade and Development (UNCTAD) came up with the figure of 40 percent reduction, which means the global FDI in 2020 would be less than US$ 1 trillion. It is happening after a long time, since 2005. Besides, it has been envisioned by UNCTAD that there would be further reduction of 5 to 10 percent in 2021, which is a scary prediction. Recovery in FDI is expected in 2022, which is still a long way to go.
The economic crises and drying investments are resulting in increasing extent of extreme poverty. World Bank report, Poverty and Shared Prosperity, has projected that 88 million to 115 million people will be added to extreme poverty (US$ 1.90) group. The South Asia would be major hit and bear the brunt of the poverty. It was estimated that 63 percent of these extreme poor will be from South Asia.
If we change the poverty line from US$ 1.90 to US$ 3.20, the number will jump to 223 million at global level and South Asia will account for 71 percent. It is happening after 20 years that the extreme would be on rise. It is expected that it will affect the about 9.1-9.4 percent world population against the pre-Covid-19 projection of 7.9 percent. The COVID-19 has also wedged the most celebrated achievements of humanity like mobility. The COVID-19 has compelled people to restrict their movement.In some cases, the countries had to adopt complete lockdown. World is still struggling to find a way of un-restricted movement of people.
International travel and shipments have also been severely squeezed. Tourism is another major sector which is bearing the brunt of COVID-19 and restriction on mobility. It is happening against the backdrop of cherished success in means of mobility like air, train etc.
The second wave of COVID-19 is further aggravating the situation. We have witnessed many countries are going back to lockdowns. The economic activities have further started to shrink. World institutes are working to analyse the effects of second wave of COVID-19. It is expected that the impacts would be more severe in 2021, if the second wave of COVID-19 continued. It would be a scary scenario, as world is already facing huge problems due to the pandemic. The COVID-19 has introduced two specific problems, which has no precedent in history;
1. Restriction on mobility.
2. Closure of economies.
Countries and regions are offering hefty relief packages domestically and globally. However, the focus is on domestic markets and economy. For example, USA has already offered more than US$ 3 trillion. European Union has announced a package of 750 billion Euros. Unfortunately, the same commitment is not visible at global level. Owing to weak response many developing, and least developed countries are suffering the most. These countries were already facing problems due to food insecurity, energy crises, poverty etc. The global data showed that even before COVID-19 world was home to 600 million poor and 820 million people suffering from food insecurity. Further, 2 billion people were looking for safe drinking water and 1 billion were in need of electricity. 2.8 billion Peoplelacked sources of good quality cooking fuel. World was struggling to find ways to take care of 263 million out of school kids. Unfortunately, the majority of these people are resident of global south or developing world.
The worst impact of COVID-19 is that the process of unilateralism and protectionism got accelerated among the big countries. Strong countries, especially the Western, led by USA seems less interested in cooperation, rather they are focusing on domestic front.It is creating a sharper divide between poor and rich countries. Now the poor countries are struggling to find a way for recovery by building cooperation with strong economies. It has culminated into three specific problems, which are pressurizing world;
1. Economic recession and poverty.
2. Unilateralism.
3. Protectionism.
However, the analysis of past and history reveals that problems can only be solved by win-win cooperation, opening the borders and multilateralism. The situation also urges that world needs to work on multiple areas simultaneously, like economy and diplomacy. However, diplomacy would have to lead the way, as world is more fragmented at the present. In this scenario China is emerging as global player which can tackle the both dimensions of the problem.
–The writers are
working with CGSS
