Covid-19 and the developing world


Muhammad Mahmood | Published: May 30, 2020 21:27:02


Blessed with a young population, Bangladesh sees lesser Covid-19 fatalities         —UNB  

The World Health Organisation (WHO) first declared Covid-19 a world health emergency in  January, 2020. Now the pandemic has spread across over 190 countries around the world. The growing Covid-19 crisis, as it is unfolding now, appears  to be of much larger magnitude for developing countries,  not only  as a health crisis in the short term but also as a catastrophic social and economic crisis in the longer run compared to the developed countries. It is increasingly becoming a strong possibility that Covid-19 pandemic is likely to cause devastation in large parts of the developing world.

In general developing countries are considered far more vulnerable to Covid-19 due largely to limited awareness among the general population about the nature and seriousness of the virus. Also, most developing countries do not have robust health care systems which are  adding to the problem. In fact, health care systems are seriously under resourced and in many instances fragile. 

These countries also do not have any health sector emergency response  plan to fight Covid -19. All these factors make these countries not being  adequately prepared  to respond to the emerging massive health crisis. But at the same time many developing countries have  much greater social resilience than developed countries. People generally rely much less on the state and have more experience dealing with disasters.

Also, health care workers are at considerable risk from the infection. Health care workers strikes and complaints have been centred around not only about lack of adequate precaution against getting infected such as PPE but also about inadequate pay and poor working conditions.  It not surprising that health care workers in these countries are united in in their complaints about the dangers presented to them by Covid-19.

While the prime targets of the virus are the aged and physically vulnerable people, it is in reality, the poor in these countries who  suffer the most as the inadequate health care system gets overwhelmed with the rising number of infections. With the existing  health care system in developing countries, the poor in these countries already live 18 years fewer than people in developed countries.

As Covid-19 is spreading across developing countries, these countries are also  resorting to similar measures as in other countries  like imposing state of emergency, social distancing, prohibiting public gatherings, closing  non-essential businesses, educational institutions and international borders and quite often domestic travel also. The difficult decisions taken by governments to limit the infection of Covid-19 will definitely save lives, but paradoxically, they will also have indirectly pushed many people into poverty and financial uncertainty.

But so far, such lockdowns appear to have in many instances failed to stop the spread of the virus. Now the fear is, in most of developing countries with very weak health care system, mass poverty and densely packed urban slums will kill hundreds and thousands of people. 

Maintaining such  lockdowns have severely adverse economic and social effects. According to the UN Development Programme (UNDP), income losses are expected to exceed US$220 billion across developing countries. The most impoverished and vulnerable sections of working people -- daily wage workers, street vendors and hawkers have suffered the largest job losses in both real and proportionate terms. People in most of these countries also have no access to social security protection and such massive income losses will reverberate across these societies impacting on health, education and  in severe cases also impact on basic food security and nutrition as we are already witnessing in many developing countries.

According to a research findings, the economic fallouts from the global pandemic could increase global poverty by affecting as much as half a billion people, or 8 per cent of the global population. The report further added that the achievement of the 2030 Agenda, in particular, the Sustainable Development Goals (SDGs) on no poverty and zero hunger, is under considerable threat. All in all, now there is  a general consensus that unless bold policy actions are taken by the international community, achieving the Sustainable Development Goals (SDGs) by the 2030 deadline will likely slip away.

Many least developed countries have successfully integrated into the global economy and many of them are at a stage now to graduate into becoming  developing countries. These countries largely rely on tourism, remittances from workers abroad and exports of light manufacturing products or commodity exports. Now the collapse of global demand has created a great degree of uncertainty and that  will have a lasting effect on these countries' future growth prospects.

The risks are not only  short term but  also long term economic shocks which will be manifested in significant productivity losses. That will reduce current and future economic prospects of many developing countries. Currently, Covid-19 is a health and economic crisis. If firms and households start defaulting on payments and loans, that may lead to a financial crisis as well.

Furthermore,  strengthening of the currency like the US dollar in which most foreign debts of developing countries are denominated will cause pre-existing debt problems to intensify. To make the situation even worse, according to the International Institute of Finance (IIF), foreign investors have withdrawn US$158 billion from stocks and bonds from emerging market economies since January 21. That is four times the outflows in the same period after the start of the 2007-08 global financial crisis (GFC).

Also most developing countries have limited fiscal space to respond to a crisis like this pandemic. Even countries with low debt/GDP ratio have limited fiscal space to stimulate to expand national health care system and protect households or keep small businesses afloat.  As output falls sharply and the deficit grows, this trend of low debt/GDP ratio will reverse. Both the World Bank and the IMF have come up with emergency loans, that may not be sufficient enough to respond robustly like in developed countries to face the economic crisis.

The economic consequences  of the pandemic are difficult to assess accurately. Although the economic crisis is still in its infancy, many are making predictions that differ in terms of duration and magnitude. Some even go as far as to suggest that the economic crisis will be as severe as the one that followed the Second World War. But they all agree on one thing - the economic slump will have a serious impact on societies  and the economies will take time to return to pre-crisis levels. That leaves developing countries struggling to figure out how to balance the public health response with the risk of economic collapse.

However, there is one likely bright spot amid all the gloomy outlook for developing countries. Some experts hope that generally younger population in developing countries will limit the number of fatalities. For example, Bangladesh has a median age of 27.1, India  27, Latin America 31 and Africa 19.4  as against 42 in the European Union and  35  in the US. Only 6.4 per cent of the population are aged over 65 in Bangladesh compared to the EU's 20 per cent and 16 per cent in the US.  Such a favourable demographic profile may help developing countries to withstand the crisis better in terms of fatalities.

muhammad.mahmood47@gmail.com

 

 

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