The COVID Middle-Income Trap
COVID-19 has had a devastating impact on middle-income countries, especially in Latin America. By helping these countries to overcome the pandemic and its economic fallout, the international community will be acting in its own interests, too.
WASHINGTON, DC – The coronavirus pandemic has had a devastating impact on middle-income countries (MICs). With the exception of the United States, the ten countries with the highest number of COVID-19 cases to date are all MICs. And the same is true for new daily cases and COVID-19 deaths per million population.
The economic projections for MICs are equally dismal. Household incomes will fall across the board in 2020, including for most of the 100 million additional people globally who will fall into extreme poverty in a downside scenario.
Latin America’s experience is illustrative: the region accounts for just 8.4% of the global population, but 30% of total COVID-19 fatalities to date. The International Monetary Fund estimates that GDP in Latin America and the Caribbean will contract by 9.4% this year, while the World Bank expects a ten-percentage-point increase in poverty in the region.