COVID-19 could cause $8.5 trillion loss in global output: UN Secretary-General

UN chief Antonio Guterres has warned that the COVID-19 pandemic will cause unimaginable devastation, usher in hunger and famine of historic proportions and lead to a loss of USD 8.5 trillion in global output -- the sharpest contraction since the Great Depression -- if nations did not respond with unity and solidarity.

“We must avoid it. The pandemic has demonstrated our fragility. Despite all the technological and scientific advances of recent decades, we are in an unprecedented human crisis, because of a microscopic virus,” the UN Secretary General said on Thursday to the high-level event on Financing For Development.

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He underlined the need for the world to respond to the unprecedented crisis with unity and solidarity.

“Unless we act now, the COVID-19 pandemic will cause unimaginable devastation and suffering around the world. Hunger and famine of historic proportions. Sixty million more people pushed into extreme poverty. Up to half the global workforce – 1.6 billion people – without livelihoods,” Guterres said.

He said the pandemic could usher in a loss of USD 8.5 trillion in global output – the sharpest contraction since the Great Depression of the 1930s.

Globally, coronavirus has infected 5,813,997 people and killed 360,397, according to Johns Hopkins University.

Later addressing a virtual press conference along with Prime Minister of Jamaica Andrew Holness and Prime Minister of Canada Justin Trudeau, Guterres said the world is afflicted by enormous fragilities: weak health systems; runaway climate change; unsustainable levels of inequality.

“We see other signs of this fragility everywhere, from the increasing risk of nuclear proliferation to the lawlessness of cyberspace. Ignoring these warning signs is senseless arrogance. Existential threats demand humility, unity and solidarity,” he said adding that the world cannot contemplate a return to the same failed priorities and systems.

“We must invest in a sustainable and inclusive recovery.”

When asked at the press conference why did the US and China not speak at the high-level event in which over 50 Heads of State and Government and international organisations spoke, Guterres said “both US and China participated in our work.

Of course, this was decided because of the very high participation that it could be only at the level of heads of state and government and both countries, for reasons of agenda, could not do that at that level, but they would be ready to participate at other levels.

The US and China are currently engaged in a war of words over a range of issues, including on trade, the origins of the coronavirus epidemic and Hong Kong.

“But they will be engaged in the Working Group. So, there is a commitment both from the United States and China to be involved in this process, which we very much welcome.”

Guterres told the high-level meeting that the UN is asking for immediate, collective action in six critically important areas to deal with the crisis.

Beginning with the global liquidity crisis, he said that this was where the health and economic crises meet; “a dangerous nexus that could prolong and deepen both," calling for extending Special Drawing Rights to supplement public spending reserves.

Noting that the economic fallout from the pandemic threatens a wave of defaults in developing countries, stymieing the effort to reach the 2030 Sustainable Development Goals, the UN chief’s second call was for “durable solutions on debt, to create space for investments in recovery and the Sustainable Development Goals."

Next, he urged private creditors holding a growing share of developing countries’ sovereign debt to find incentives to encourage more creditors to provide debt relief.

Guterres then drew attention to external funding, saying that aligning incentives in global financial systems with the SDGs would boost confidence “to relaunch investment in sustainable development.”

Turning to illicit financial flow, such as tax evasion and money-laundering, which deprive developing countries of hundreds of billions of dollars annually, he said that “we must plug the leaks” by revising national systems and international frameworks.

The UN chief also highlighted the overarching need to “recover better” from the ravages of the coronavirus pandemic.

Trudeau called the pandemic “a stark reminder” of how interconnected our world has become, spelling out that “to keep our citizens safe and healthy, we must defeat COVID-19 wherever it is found.”

This requires a global, coordinated plan that will also facilitate global and domestic economies to bounce back.

Jobs and businesses in every country depend on “the health and stability of economies elsewhere” – all of which is hinged on the success of the global economy in weathering this storm, said the co-convener of the high-level summit.

“COVID-19 is an unprecedented challenge for our modern world, but it’s also a unique opportunity to build a better future, to create a safe and prosperous world,” he added.

Holness called the pandemic “a wake-up call” for the international community to reinvigorate a comprehensive system of global economic governance “that can cope with global disruptions while promoting inclusive development.”

He said a big challenge for the international financial system was to channel public and private credit flows, into productive, inclusive developmental capital flows.