The UN has said the poorest and most vulnerable countries will be the biggest losers from a pandemic downturn that will leave the global economy nursing $10tn (£7.2tn) of losses by the end of the year.
Despite becoming the latest international body to revise its growth forecast for 2021 upwards, the UN’s conference on trade and development (Unctad) said there were signs the pandemic would end with pre-crisis problems unresolved.
It said in its half-yearly update to its trade and development report that it expected the global economy to expand by 4.7% this year, up from the 4.3% it predicted six months ago.
It follows the International Monetary Fund and the Organisation for Economic Cooperation and Development in upgrading its 2021 forecasts.
Unctad said recent developments in the US were one reason for the revision, citing progress in administering vaccines and the likely impact of Joe Biden’s $1.9tn (£1.4tn) stimulus programme.
It added, however, that the global economy would be more than $10tn smaller by the end of 2021 than it would have been had it continued on its pre-crisis trend. Underlying problems – inequality, indebtedness and a lack of investment – had been made worse by the crisis, it said.
“The brunt of the hit to the global economy is being felt in developing countries with limited fiscal space, tightening balance of payments constraints and inadequate international support, Unctad said.
The report from the Geneva-based body described 2020 as an “annus horribilis”, but acknowledged that the biggest annual fall in global output since the 1930s could have been even worse.
Early action by central banks to avoid a financial meltdown, stimulus packages from finance ministries, a recovery in capital flows and commodity prices and the “unprecedented” fast-tracking of vaccine development all helped to avoid an even more vicious deflationary spiral.
Even so, Unctad said, international cooperation had fallen well short of what was needed given the scale of the economic and health crisis. It compared the $12bn of suspended debt servicing payments for the 46 countries participating in the G20’s Debt Service Suspension Initiative with the $80bn for the 73 countries eligible for the relief in 2019.
