- The extreme poverty level in LDCs is projected to expand by 32 million in 2020, to reach 377 million people.
More than 32 million of the world’s poorest people face being pulled back into extreme poverty because of COVID-19, leading economists at the United Nations has warned. The data in UN latest report shows that the pandemic is likely to cause the worst economic crisis in decades among Least Developed Countries (LDCs).
In a call for urgent investment and support from the wider international community, the UN trade and development agency, UNCTAD, warned that the new coronavirus risked reversing years of “painstaking progress” in poverty reduction, nutrition and education.
“The COVID crisis is leading LDCs to their worst economic crisis in 30 years, with per capita GDP (Gross Domestic Product) for the group expected to fall by 2.6 per cent this year ,” said Mukhisa Kituyi, UNCTAD Secretary-General.
As per the UN report, countries falling under LDC’s are Angola, Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of the Congo, Djibouti, Eritrea, Ethiopia, Gambia, Guinea, Guinea-Bissau, Haiti, Lesotho, Liberia, Madagascar, Malawi, Mali, Mauritania, Mozambique, Niger, Rwanda, Senegal, Sierra Leone, Somalia, South Sudan, Sudan, Togo, Uganda, United Republic of Tanzania, Zambia, Afghanistan, Bangladesh, Bhutan, Cambodia, Lao People’s Democratic Republic, Myanmar, Nepal, Yemen. Island least developed countries: Comoros, Kiribati, Sao Tome and Principe, Solomon Islands, Timor-Leste, Tuvalu, Vanuatu.
As per the report, in 2019, average earnings per capita in these countries – which are mainly in Africa - was $1,088 compared with the world average of $11,371, the UN agency said, highlighting their weak infrastructure and reduced financial means to withstand economic shocks.
The report was of the view that LDCs have so far been spared from the worst effects of the health emergency, yet the fallout from the COVID-19 pandemic has taken its toll on their economies, rolling back some of the progress made towards sustainable development and possibly leading to long-term damage.
The GDP per capita of least developed countries (LDCs) is projected to contract by 2.6 percent in 2020 from already low levels, as these countries are forecast to experience their worst economic performance in 30 years. At least 43 out of the 47 LDCs will likely experience a fall in their average income.
The extreme poverty level in LDCs is projected to expand by 32 million in 2020, to reach 377 million people. The poverty rate will rise from 32.5pc to 35.7pc in 2020, due to the COVID-19-induced economic crisis.
Whereas, the current account deficit of LDCs is forecast to widen from $41 billion (or 3.8% of their collective GDP) in 2019 to $61 billion (or 5.6% of their GDP) in 2020, the highest value ever.
However, the potentially disastrous fallout from the new coronavirus pandemic could be reversed with urgent investment and support from the international community to help overcome LDCs’ vulnerabilities and improve their manufacturing capacity, Kituyi insisted.
Turning to concerns about how COVID-19 threatens to push back moves to implement much-needed transformative economic changes in line with the Sustainable Development Goals (SDGs), the UNCTAD chief said that those which had invested most in boosting production capacity were the ones that were likely to weather the global downturn.
The report, which assesses the economic potential and capacity of least developed countries, also highlights what key measures will help them recover better after the pandemic.
Improve productive capacities of world’s poorest countries for stronger recovery, UNCTAD says As an example of sustainable industrial change, it cited Uganda’s Kayoola Bus initiative, which has established the domestic production of buses powered mainly by renewable energy, to tackle the environmental and health problems of transport-related air pollution.
The report pointed out that African LDCs continue to face the challenge of diversifying their economies and developing high productivity economic activities. Given the still very significant share of employment in agriculture, these countries have a very high potential for further structural transformation.
African LDCs face two contemporaneous challenges: they must strongly accelerate the rhythm of agricultural labour productivity growth; and, substantially generate employment in other sectors for their rapidly growing populations. Moreover, these new jobs need to be of a considerably higher productivity level than those found in their respective agricultural sectors.