IMF WARNS THAT WITHOUT GLOBAL ACTION COVID WILL WIDEN INEQUALITY GAP
By Alex Pollock
The global economy is ‘coming back’ the International Monetary Fund said, but warned that the road to recovery from the COVID-19 pandemic will likely be long and uncertain with ‘uneven recoveries’ in emerging and developing economies significantly worsening the prospects for redressing income inequality within and between nations. (Al Jazeera)
A global recession
The International Monetary Fund (IMF) predicts that the world economy will decline by 4.4% by the end of 2020, as the COVID-19 pandemic has created the largest global recession since the Great Depression. While the expected 4.4% is less severe than the June prediction of 5.2%, many countries are expected to experience COVID-related economic effects for the next few years. Some wealthier countries, such as China and the United States, have started to see economic improvement; however, much of the developing world is struggling to combat the virus and its effects, as 90 million people are expected to fall into extreme poverty this year, according to the IMF.
Studies are showing that both underdeveloped and developing countries are experiencing more drastic economic effects than wealthier nations, due to a lack of adequate financial, social, and healthcare services prior to the coronavirus outbreak. Nations in Africa, the Middle East, and Latin America are expected to experience the worst of the “uneven” recoveries, as they rely heavily on foreign aid and face other internal challenges such as political unrest and resource shortages. Inequalities in healthcare, debt relief, and social services are leading international aid agencies to call for immediate policy reform that would provide relief to nations suffering from crippling international debts and ensure equal access to COVID-19 treatments and vaccines, once developed.
While the United States has the highest infection rate – just over eight million confirmed cases – a country like the US has the economic resources to combat that number despite being forced into a nationwide lockdown. However, countries in Latin America, Venezuela, for example, with approximately 86,600 cases, are being economically decimated by the outbreak despite significantly lower infection rates, due to less developed economies and significant unrest prior to the pandemic.
This kind of inequality is causing several of the world’s poorest countries to fall into extreme poverty. It is estimated that 20 million people in Sub-Saharan Africa will fall into extreme poverty by the end of 2020. Countries in Sub-Saharan Africa, along with several in Latin America and Central Asia, do not have the financial resources or political stability to deal with a crisis of this magnitude.
India, one of the worst-hit nations with over 7.5 million infections, has seen a decrease of 10.3% in its economy. India’s population and large underdeveloped ‘slum’ areas have made proper sanitation and healthcare access unavailable to those living in poor economic conditions.
The wealth gap is predicted to continually increase both globally and internally throughout the next several months. According to reports from the IMF, while 44 million Americans lost jobs between April and June, the top five billionaires in the US increased their fortunes by $102 billion, collectively. In total, throughout the first half of 2020, US billionaires increased their wealth by $637 billion to a total of $3.6 trillion, which is more than the entire wealth of all 54 African countries.
While the US is one example of a growing internal wealth gap, the global wealth gap is also increasing as economies such as the United States and China start to see growth while the IMF estimates that developing countries will require more than $2.5 trillion in aid to see an economic recovery. To ensure continued economic growth through the pandemic, many wealthier countries have cut foreign aid budgets. Out of the $2.5 trillion needed to spark an economic recovery, only $100 billion has been donated (aid budgets are generally allotted based on a country’s overall economic health).
International aid and relief
The G20 – a group of 20 of the world’s largest economies – has agreed to extend the suspension of debt repayments to countries struggling to combat COVID-19. The countries that qualify will have an additional six months – until June 2021 – to repay international debts that would have been due at the end of 2020.
The extension will suspend $14 billion in debts that the world’s poorest countries are struggling to repay. Some nations were spending more on debt repayment than on healthcare and stimulus programmes. While the extra time will help struggling countries in the short-term, aid agencies argue that the plan is not comprehensive enough to allow for long-term recovery, arguing that cancellation of the debt would be a more helpful step. “The failure to cancel debt payments will only delay the tsunami of debt that will engulf many of the world’s poorest countries, leaving them unable to afford the investment in healthcare and social safety nets so desperately needed,” said Jaime Atienza, an Oxfam official who manages debt policy.
G20 officials reported that additional suspensions could be granted if deemed necessary, however, further discussions will not take place until the initial six-month period is over. David McNair, the executive director at ONE, an international aid group, said the group’s resistance to debt cancellation reveals the inequality between the world’s more successful economies and those struggling to survive. “This pandemic has laid bare a glaring and unjust double standard: the world’s wealthiest countries play by one set of rules, and the world’s poorest by another,” said McNair.
One of the ways inequality has been deepening is the growing problem of ‘vaccine nationalism.’ The World Health Organisation (WHO) has warned against ‘vaccine nationalism’ – when wealthier countries keep treatments and vaccines to themselves because of the monetary investment in the creation of the vaccine.
According to WHO, there are currently 42 coronavirus vaccine candidates participating in clinical trials, with another 152 in the pre-clinical trial phase. Several nations have joined COVAX, an initiative led by WHO to develop and equally distribute a COVID-19 vaccine. However, some of the wealthiest economies such as the United States and Germany are not a part of the vaccine-sharing initiative. The US has declined participation due to the WHO’s involvement.
Even if COVAX develops a vaccine, many of the world’s poorer nations do not currently have the capability to receive large quantities of active vaccines. Several of the most promising COVID-19 vaccines will require constant sterile refrigeration to remain safe and effective, a requirement many nations will not be equipped to handle. Despite several aid agencies’ efforts to equip developing nations with the necessary technology to handle vaccines, almost three billion people live in countries where adequate temperature-controlled facilities are unavailable. Several countries – specifically in Africa, Latin America, and Asia – would be unable to use a vaccine effectively if one were to become available now. “I’m not optimistic on how the vaccine would be distributed in the inner states because there is no infrastructure of any kind to guarantee delivery — or if it gets delivered, guarantees the adequate preservation under cold conditions,” said Dr Alberto Paniz-Mondolfi, a Venezuelan pathologist.
While the needed refrigeration systems are rare even in countries such as the United States, the US and other developed nations have the technological and financial capabilities to adapt quickly to such needs, a luxury a majority of other countries do not have.
UNICEF is working to decrease the vaccine inequality by stockpiling millions of syringes by the end of 2020 that can be distributed to nations in need. The organisation is expected to have 520 million syringes available to distribute by the time a vaccine is ready “to ensure that these supplies arrive in countries by the time the vaccines do,” UNICEF executive director Henrietta Fore said.
FROM A CHRISTIAN PERSPECTIVE
There are several references in the Bible to the importance of helping the poor. Both the Old and New Testament speak to the Church’s responsibility to give to the poor, feed the hungry, clothe the naked, and care for those who suffer. The COVID-19 pandemic has dramatically increased the needs of people all over the world, thus increasing the Church’s responsibility to act and put the Bible’s commands into practice. Many churches have given significant financial donations to international aid organisations in 2020, however, the Church is called to do more than to try to eradicate physical poverty. Physical poverty will always be a part of this broken world, as the Lord said in Mark 14:7: “The poor you will always have with you…” The Church is called to address spiritual poverty as well.
INcontext partners, as well as numerous Christian media sources, have reported an increased interest in Christianity during COVID lockdowns due to the increased stress and sense of hopelessness caused by the ongoing economic, social, and political stresses around the world. The Church has been given the opportunity to help those who are experiencing both physical and spiritual poverty during this time. It is evidenced both in the Bible and throughout the secular world that it is those that receive hope, physical aid, and life-giving resources that are most likely to give that hope and aid to others. “And if you spend yourselves on behalf of the hungry and satisfy the needs of the oppressed, then your light will rise in the darkness, and your night will become like the noonday.” (Isaiah 58:10 NIV)
Please pray with us:
- For an effective global response to the widening economic gap – that righteousness will prevail over greed
- For the Church to offer hope and assistance during these very difficult times
- For believers to demonstrate Christ’s extravagant love tangibly
Image: REUTERS/Juan Medina