COVID-19 will hit South Asia very hard, likely to wipe out gains from poverty alleviation: World Bank
WASHINGTON: The global coronavirus pandemic will hit South Asia very hard, and significant progress in alleviating poverty in the region is likely to be curtailed due to the impact of the deadly disease, the World Bank warned Sunday.
In its twice-yearly regional update, the bank said South Asian governments must accelerate actions to curb the health emergency, protect its people, especially the poorest and most vulnerable, and set the stage for rapid Economic recovery.
The latest report 'South Asia Economic Focus' anticipates a sharp economic downturn in each of the region's eight countries, caused by disruption of economic activity, the collapse of trade and increased stress in the financial and banking sectors .
The COVID-19 pandemic will hit South Asia hard and significant progress in alleviating poverty in the region is likely to be erased, the report warned.
In this changing and uncertain context, the report presents for the first time a series of forecasts,
That would be the worst performance in the region in the last 40 years, with temporary contractions in all the countries of South Asia. In case of prolonged and extensive national blockades, the report warns of the worst case scenario in which the entire region would experience a negative growth rate this year.
This deteriorating forecast will persist in 2021, with growth expected to range between 3.1 and 4.0 percent, below the previous estimate of 6.7 percent, he said.
Maldives is expected to be the hardest hit along with Afghanistan, Pakistan and Sri Lanka, where the full forecast range is in negative territory, said Hans Timmer, World Bank Chief Economist for the South Asia Region.
The other countries are likely to be experiencing short-term recessions, but the growth figures for the fiscal year could look positive, he added.
For example, India we forecast a baseline growth of between 1.5 and 2.8 percent. In the worst case scenario, all countries would experience declining GDP in their annual growth numbers, he said.
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> The priority for all South Asian governments is to contain the spread of the virus and protect its people, especially the poorest facing the worst economic and health outcomes, said Hartwig Schafer, World Bank Vice President for the Asia region of the South.
The COVID-19 crisis is also an urgent call to action to implement innovative policies and jump-start South Asia's economies once the crisis is over. Failure to do so can lead to long-term growth disruptions and reverse the progress hardly made in reducing poverty, he said.
According to the report, the impact of the pandemic will affect low-income people, especially informal workers in the hospitality, retail, and transportation sectors who have limited or no access to health or social security networks.
The report notes that the COVID-19 crash will likely reinforce inequality in South Asia.
As it unfolded across the region, the sudden and large-scale loss of low-paid work has led to a massive exodus of migrant workers from cities to rural areas, raising fears that many of them will fall back into poverty. , He said.
While there are still no signs of widespread food shortages, the report warns that a protracted COVID-19 crisis may threaten food security, especially for the most vulnerable.
In the short term, the report recommends preparing weak health systems for greater COVID-19 impacts, as well as providing safety nets and ensuring access to food, medical supplies and needs for the most vulnerable.
To minimize short-term economic pain, the report calls for establishing temporary work programs for unemployed migrant workers, enacting debt relief measures for businesses and individuals, and facilitating interregional customs clearance to accelerate the import and export of goods. essential.
Once the blocking restrictions are loosened, South Asian governments should adopt expansive fiscal policies combined with monetary stimuli to maintain the flow of credit in their economies, he said.
Given that many South Asian countries have limited fiscal space, these policies should target those most affected by the freeze in economic activity, he said.
The report urges governments to adopt temporary spending measures and coordinate with international financial partners to avoid unsustainable long-term debt levels and fiscal deficits.
After facing the immediate threat COVID-19, South Asian countries must keep their sovereign debt sustainable through fiscal prudence and debt relief initiatives, Timmer said.
And looking beyond the current crisis, there are great opportunities to expand digital technologies for payment systems and distance learning to unlock remote areas in South Asia, said the World Bank chief economist for the Asia region of the South.
The new coronavirus that originated in China in December has killed 108,862 people and infected more than 1.7 million people worldwide. The United States has the highest number of infections with 529,887, while Italy leads the death toll with 19,468 deaths, according to data from Johns Hopkins University.