COVID-19 Pandemic Recession and Recovery
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THEMATIC SECTION
COVID‑19 Pandemic Recession and Recovery K. S. Jomo1 · Anis Chowdhury2
© Society for International Development 2020
Abstract This review draws pragmatic lessons for developing countries to address COVID-19-induced recessions and to sustain a developmental recovery. These recessions are unique, caused initially by supply disruptions, largely due to governmentimposed ‘stay-in-shelter lockdowns’. These have interacted with falling incomes and demand, declining exports (and imports), collapsing commodity prices, shrinking travel and tourism, decreasing remittances and foreign exchange shortages. Highlighting implications for employment, wellbeing and development, it argues that governments need to design comprehensive relief measures and recovery policies to address short-term problems. These should prevent cash-flow predicaments from becoming full-blown solvency crises. Instead of returning to the status quo ante, developing countries’ capacities and capabilities need to be enhanced to address long-term sustainable development challenges. Multilateral financial institutions should intermediate with financial sources at low cost to supplement the International Monetary Fund’s Special Drawing Rights to lower borrowing costs for relief and recovery. Keywords Debt · Deficit · Food security · Industry policy · Recession · Recovery · Relief · Sustainable development · Stimulus packages The COVID-19 pandemic has significantly impacted most economies in the world. Its full impacts will not be felt, let alone measured, until it runs its course. Secondary effects will be around for much longer, with their consequences altering courses. Their implications are likely to extend beyond the medium-term, sometimes described as ‘permanent scars’ or injuries, forever reducing capacities and capabilities, even if not reversibly. Most countries are still struggling to contain contagion, as the waves seem unending, while the costs on both lives and livelihoods will have long-term repercussions.
This article is based on the authors’ opinion pieces published by the Inter Press Service (IPS) News Agency, which can be accessed at https://www.ipsnews.net/author/jomo-kwame-sundaram/ and https://www.ipsnews.net/author/anis-chowdhury/. * Anis Chowdhury [email protected] K. S. Jomo [email protected] 1
Khazanah Research Institute, Kuala Lumpur, Malaysia
School of Social Sciences and Psychology, Western Sydney University, Sydney, Australia
2
The global economic situation remains even more unpredictable than usual, with uncertainties about the varied nature of the pandemic recessions. Government responses have not only been diverse, but often poorly conceived due to the novel nature of the crises. Impacts have varied with the contagion and policy responses,1 unhelped by often confusing, if not misleading metrics.2 Such uncertainty is also reflected in the wide-ranging growth forecasts by major international organizations (e.g., OECD).3 The International Monetary Fund (IMF 2020a) has recognized the ‘Gre
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