Clicky
Business

Global crash, steep fall in growth feared


Published : 20 Jun 2021 09:11 PM

Experts at a virtual session feared a global crash ahead in which growth would fall steeply leading to public indebtedness, disintegration of democracy, and a collapse of international cooperation.   

They also expressed that the possibility of a "bad" scenario in which the world would return to how it used to be in the year 2019 with no regard for climate change and inequality.

The remarks were made in the final session of the 2nd SANEM International Development Conference (SIDC) 2021 titled "COVID-19 Recovery: Contexts and Priorities-Developing Countries' Perspective". 

Two eminent personalities including Professor David Hulme, Professor of Development Studies, University of Manchester, and Dr Martin Rama, Chief Economist, Latin America and the Caribbean region,The World Bank, spoke during the session. 

Professor David Hulme shared a study that he had conducted in the beginning of the pandemic which painted three possible scenarios for the impact of the COVID-19 on global development: the good, the bad and the ugly.

 In the worst case, which he termed as the "ugly" scenario, he predicted a global crash in which growth would fall steeply leading to public indebtedness, disintegration of democracy, and a collapse international cooperation.   

He also described the possibility of a "bad" scenario in which the world would return to how it used to be in the year 2019 with no regard for climate change and inequality.

The last scenario, which he termed as the “good” scenario, was based on the idea that the crisis would be looked at as an opportunity to improve institutions, policies and development outcomes. According to Professor David Hulme, as the pandemic unfolded, it has become evident that the “bad” scenario has been the one which has worked out with the world becoming more unequal and climate change emerging as a major problem in the absence of a firm global leadership. According to Professor Hulme, the choice between lives and livelihoods is often presented as a trade off in which countries are too concerned either about the health and morbidity impacts of the pandemic or about the economic and social impacts associated with the pandemic. 

Professor Hulme stressed that countries need to consider the forgone healthcare among patients across both high-income and low-income countries who have not received treatment during the pandemic. 

Panellist Dr Martin Rama presented data on Latin America - the most affected region in terms of health and economy - to connect it with the topic of the session. In the first year of COVID-19, the mortality was often higher than COVID-19 deaths suggest - not all countries have the ability to test and classify deaths in the same way. The gap between excess mortality and official COVID-19 deaths was seen to be larger in Latin American countries. In the developing world, Latin America had the greatest decline in GDP - the only other comparable region was South Asia. 

When data on economic and health impacts are combined in the first year, there are some interesting observations - while some East Asian and Nordic countries had the best overall performance, even the best performers saw their GDP growth rates fall by around 5 percentage points; some in Latin America had the worst overall performance. 

Over the three days of the conference, a total of 29 research papers related to the impact of the pandemic were presented by scholars and researchers across the globe. 

The conference also created a platform for eminent economists and personalities to engage in intellectual discussions and share their insights on the emerging socioeconomic issues and suggested ways to ensure a smooth recovery. 

On behalf of South Asian Network on Economic Modeling (SANEM), Dr Selim Raihan convened the conference.