Coronavirus / Covid 19_vierde

A year on after we first heard about the new coronavirus.  Here in Europe, we are still facing significant restrictive measures.  These range from school closures, limits on group size, limits to travel and face masks remain ubiquitous.  It seems just like yesterday we were in Niamey, deciding if it was better to stay or to go due to the pandemic.

But while the developed world has suffered, a big question was how developing countries would fare.  I have touched on this in the past blogs.  In terms of direct health impact, the impact outside of the West has been mixed.  But even though the impact has been significant in some countries and region, the absolute worst-case scenario that some feared has been avoided so far.  However, there is some evidence that the economic impact could be significant.  This has been argued by the IMF, and the UN fears a ‘lost decade’.  This even after here too, there was some initial optimism.

An interesting and valuable contribution to this reflection has been a recent research article by Egger et al.  In it they present data from household surveys that were conducted in 9 developing countries in Asia, Africa, and Latin America.  This is particularly valuable as headline economic data is sketchy at best from developing countries and it is challenging to understand how this reflects on how people are living.

They note that, ‘A full 50 to 80% of sample populations in Bangladesh, Burkina Faso, Colombia, Ghana, Kenya, Rwanda, and Sierra Leone report income losses during the COVID-19 period.  If these effects persist, then they risk pushing tens of millions of already vulnerable households into poverty…  By April, many households were already unable to meet basic nutritional needs.’  Not only is there the risk that progress made on poverty reduction will be lost (as argued above in the UN commentary), but the authors note that, ‘Following on decades of steadily increasing incomes across major world regions, the sharp rise in global poverty in 2020 that we document is unprecedented.  The median proportion of respondents across our sample countries experiencing reduced income is a staggering 67%, and negative effects are experience by households across the socioeconomic spectrum.’

I started working on development issues in 2004, on South East Asia.  I remember how in Indonesia – even 7 years after the Asian financial crisis – people would still reflect on how it impacted their lives.  The poverty rate increased from 17% to 24% in some 2 to 3 years and Indonesia ended up having a much reduced poverty reduction rate going forward (see this paper, for example).  Politically this also resulted in many changes – arguably the 1999 secession of East Timor (and the war), the end of the Suharto regime, and the rise of terrorism (e.g., the 2002 Bali bombings) were all at least in part linked to the economic developments.
We shall see what that means for the post-covid world around the globe.

05.04.2021, Brussels, Belgium