In much of the rich world, at least, phase one of the coronavirus crisis is passing. As the number of infections falls and lockdowns ease, many governments are entering a new phase — beginning to plan how to reformulate economic policy and support a recovery. Yet co-ordinated international long-term planning is still strikingly absent. Unless this changes, the biggest victims will be poorer countries, which face deep scarring from the crisis.
The pandemic is by no means over. Coronavirus is now hitting many emerging markets harder than advanced economies: Brazil has the highest daily death rate, while the number of deaths is increasing in populous middle-income countries including Mexico, India and Russia. Even while the number of cases declines in Europe and the US, the global growth rate in cases has increased, with Latin America and the Caribbean now at the centre of the pandemic — accounting for roughly two-fifths of all deaths.
Emerging markets have less capacity to respond to the virus, with weaker public health systems and economies that often depend heavily on tourism or remittances. These sources of foreign currency have dried up and, along with the collapse in commodity prices, that has put pressure on financial systems and government budgets. The World Bank estimates, in a report published on Tuesday, that the economy of the average developing country will be 8 per cent smaller after five years than it would have been without the pandemic, thanks to a “recession combined with a financial crisis”. For energy exporting countries, the shortfall rises to 11 per cent.