The Post-Pandemic Whiplash Awaiting the World’s Poor
Unlike a pandemic that puts rich and poor alike at risk, the kind of economic crisis currently simmering in much of the developing world is easy to ignore. But unless national governments and multilateral organizations act quickly, today’s looming threat will be tomorrow’s front-page news.
ITHACA – The world is currently transfixed by the second wave of the COVID-19 pandemic sweeping through many regions, especially Asia, Africa, and South America. But, focused as we are on the public-health crisis, we risk overlooking pandemic-related economic problems that could plague developing countries long after the wave has receded.
At the global level, the International Monetary Fund has warned of a “Great Divergence,” whereby rich countries recover strongly while others flounder. Recent evidence suggests that several advanced economies, notably the United States, and a few developing countries, like Vietnam, Thailand, and Bangladesh, seem to be pulling out of the crisis and could grow faster than they did before the pandemic. But many emerging economies and low-income countries are likely to languish for a long time.
A Great Divergence is visible even within economies. The pandemic has punished sectors such as hospitality, travel, and tourism, and boosted others like pharmaceuticals, digital platforms, and networking technology. It is therefore not surprising that many rich people, including those who are good at navigating equity markets, have actually emerged from the crisis better off, while the poor have borne the brunt of its impact.