With COVID-19 inspired economic shutdowns dealing a severe blow to the global economy, especially those of poorer countries, the World Bank Group has advised developing countries and the international community to take steps now to speed up recovery after the worst of the health crisis is over to blunt long-term adverse effects.
Also, following the alarm raised by the Minister of Finance, Budget and National Planning, Mrs. Zainab Ahmed, that the global economic was heading for recession, the leaders of the Organised Private Sector (OPS) have called for the speedy implementation of the economic stimulus packages and palliatives measures announced for the private sector by the federal government and the Central Bank of Nigeria (CBN) in order to accelerate economic recovery and avert a recession and job losses.
The multilateral institution also noted that the scope and speed with which COVID-19 and the economic shutdowns have devastated the poor around the world are unprecedented in modern times, adding that current estimates show that 60 million people could be pushed into extreme poverty in 2020.
According to analytical chapters from the bank’s just-released Global Economic Prospects report, securing core public services, getting money directly to people, and maintaining the private sector would limit the harm and help prepare for recovery from COVID-19.
The analysis of the report was released yesterday ahead of tomorrow’s issuance of the full report, which would include the latest forecasts for the global economy.
The report observed that short-term response measures to address the health emergency and secure core public services would need to be accompanied by comprehensive policies to boost long-term growth, including improving governance and business environments, as well as expanding and improving the results of investment in education and public health.
It noted that current low oil prices also present an opportunity to review energy pricing policies as energy-importing emerging market and developing economies (EMDEs) like Nigeria need to move away from costly subsidy schemes and allocate their limited financial resources for higher-priority expenditures involving improvements in public health and education programmes.
According to the report, in the short-term, while restrictions on transport and travel remain in place, low oil prices are unlikely to provide much support for growth and may, instead, compound the damage wrought by the pandemic by further weakening the finances of producers, adding that low oil prices are likely to provide at best marginal support to global activity early in the recovery.
In a comment, the Director of World Bank’s Prospects Group, Ayhan Kose, said: “Oil-exporting emerging and developing economies entered the current crisis with eroded fiscal positions after having drawn on them to weather the 2014-16 oil price drop. In addition to the unprecedented public health crisis, these economies are now experiencing sharp economic downturns as their export revenues nosedive.
“Even if oil prices rise as global oil demand recovers, the recent plunge in prices is another reminder for oil-exporting countries of the urgency to continue with reforms to diversify their economies.”
To make future economies more resilient, the report said many countries would need systems that could build and retain more human and physical capital during the recovery – using policies that reflect and encourage the post-pandemic need for new types of jobs, businesses and governance systems.
The World Bank Group President, David Malpass, said: “The scope and speed with which the COVID-19 pandemic and economic shutdowns have devastated the poor around the world are unprecedented in modern times. Current estimates show that 60 million people could be pushed into extreme poverty in 2020. These estimates are likely to rise further, with the reopening of advanced economies the primary determinant.
“Policy choices made today – including greater debt transparency to invite new investment, faster advances in digital connectivity, and a major expansion of cash safety nets for the poor – will help limit the damage and build a stronger recovery. The financing and building of productive infrastructure are among the hardest-to-solve development challenges in the post-pandemic recovery.
“We need to see measures to speed litigation and the resolution of bankruptcies and reform the costly subsidies, monopolies and protected state-owned enterprises that have slowed development.”
