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Solutions that can help the global economy to sustainably recover from COVID-19

Solutions that can help the global economy to sustainably recover from COVID-19

The current world economic crisis could be an opportunity to shift public policy to a more inclusive, sustainable and flexible global economy.

Solutions that can help the global economy to sustainably recover from COVID-19. Photo: EPA / VNA

The COVID-19 pandemic had a serious impact on the global economy. Nations have sought to prevent the spread of the epidemic by restricting movement, suspending many unnecessary activities and exercising social distance.

Although these measures have saved many lives, they have also caused the worst recession since the Great Depression of the 1930s.

According to the Secretary General of the United Nations Conference on Trade and Development (UNCTAD) Mukhisa Kituyi, the current world economic crisis could be an opportunity to redirect public policy to an inclusive global economy. more, more sustainable and flexible.

Measures of recovery should be based not solely on economic growth, but on other aspects of development agreed upon in the United Nations Sustainable Development Goals (SDGs).

This will require a concerted effort, as economic recession often results in reduced environmental protection. Countries must avoid a “race to the bottom”, where states seek to secure a competitive advantage by reducing environmental protection measures.

Instead, to eliminate this risk, it is necessary to adjust trade policies more closely to climate objectives and further integrate the environmental aspects into the international trade framework.

For example, international cooperation could focus more closely on greening trade infrastructure and expanding transnational environmental standards to foster a more sustainable post-COVID-19 economy.

International trade must be part of any recovery effort to build a fairer and more sustainable global economy. The pandemic has contributed to promoting the perception that international trade can have profound effects on lives and livelihoods, both positively and negatively.

Committing and implementing the 2030 Agenda for Sustainable Development and the Addis Ababa Development Finance Program of Action will help ensure that inclusive trade growth is the economic foundation for sustainable development.

The crisis once again emphasized the need for continued multilateral trade cooperation and a strong trading system to contribute to post-crisis recovery.

In 2019, global trade will reach around $ 25,000 billion, with then estimates expected to grow by 3% by 2020.

Without a quick recovery in the second half of 2020, there is a high chance that trade will plummet by about 20 percent this year, or about $ 6,000 billion. Such a drop would be unprecedented, significantly larger than the $ 4,000 billion drop in the 2009 recession.

The impact of the COVID-19 pandemic on international trade is heavy and in many respects. The global economy is currently expected to decline by around 5% by 2020.

The price of goods falls, manufacturing volume falls and activity in the global value chain is disrupted. Trade in services is affected significantly. The number of international tourists is expected to decrease from 60 to 80% in 2020. Remittances have decreased significantly.

In the midst of trade tensions between the US and China, the pandemic has intensified global uncertainty, making it difficult to fulfill the commitments of the two superpowers’ previous first-stage trade agreement.

COVID-19 has the potential to aggravate stress, and create a more fragmented and polarized global economy, with obvious negative consequences for many countries.

Before the pandemic, there was much skepticism about international trade. However, the COVID-19 emergency situation has shown the importance of keeping trade open in times of crisis. For example, cross-border trade is instrumental in responding to the global demand for COVID-19 related medical products.

International trade in items such as personal protective equipment and ventilators has more than doubled in just a few months. The pandemic has also spurred an increase in e-commerce, linking consumers with manufacturers not only domestically but also across borders.

While developed and emerging countries deploy huge economic packages to support people and businesses, many developing countries are severely constrained financially in their recovery efforts and need a life buoy.

Development assistance and a COVID-19 suspension are welcome, but a true global economic recovery will require international markets to remain open and more resilient.

However, during times of economic downturn, the attractiveness of unilateral measures often increases. For example, when a pandemic broke out, a number of countries imposed export restrictions and stockpiled with essential health goods and basic food.

But it would be wise if countries do not adopt policies of “turning neighbors into beggars.” Although trade restrictions can provide relief in the short term, they often cause retaliation, shortages of supply and price increases in international markets, with serious consequences for the economy. global economy.

Trade protectionism will also increase the imbalance in the recovery process, increasing the risk that the pandemic will exacerbate existing inequality, creating the possibility of underdeveloped countries. LDCs will lag further behind.

To avoid an increase in protective measures, governments must monitor responses to COVID-19 affecting trading partners.

It is important to ensure that any such measures are temporary, while at the same time properly addressing the interests of affected countries, especially LDCs.

Ultimately, keeping exports to developing countries free of unwarranted obstacles will be a key factor for a large-scale recovery.

According to former Secretary General of the United Nations Ban Ki-moon, the COVID-19 pandemic has upset our interconnected world, increased existing inequalities and widened divisions. Socioeconomic. This has the potential to stagnate, or even reverse, global progress in SDG goals.

Mr. Ban said that the global financial crisis of 2008 could provide some important lessons on this issue. There are many similarities with both of these global crises.

GDP has fallen, unemployment has risen, the housing crisis is worsening, food insecurity is growing exponentially.

The World Food Program warns that 270 million people will face food insecurity by the end of 2020.

Both COVID-19 and the 2008 financial crisis demonstrated the interconnected nature of the globalized world and demonstrated that global solutions are needed to persistently overcome inherent global challenges. . Timely high-level international cooperation plays a decisive role in preventing further disasters.

In the COVID-19 crisis, however, the world lacked this decisive type of cooperation and global leadership. Countries are taking their own partial approaches with varying degrees of success. The conflict of power is growing. Divides and distrust are sadly blossoming at a time when a coordinated international response is needed.
It is important to adhere to multilateralism and international cooperation to also guide post-COVID-19 restoration activities.

In order to rebuild better, it is first necessary to ensure that the most vulnerable are protected. Nations need to be brought together in a similar spirit, for COVID-19 and its secondary economic and social aftershocks will affect especially the most vulnerable.

The second is to increase investment in resilience to public health and global health security. This will also be a huge step forward in combating growing inequality and enhancing social inclusion. Policy makers this time must invest in people, not banks.

Third, it is important to ensure that recovery from COVID-19 simultaneously addresses climate change and provides paths to a more resilient and sustainable planet.

As temperatures rise, sea levels rise, wildfires and records of unemployment, it is necessary to provide green jobs in the renewable energy sector towards the goal of limiting global temperatures to 1, 5 ° C.

By the end of 2020 the unemployment rate could rise to 10% in Organization for Economic Co-operation and Development (OECD) countries, or even as high as 12% if a second wave of COVID-19 spreads, do not recover until after 2021.

The bottom line is that this post-pandemic recovery must lead to a more inclusive, sustainable and resilient future. This future must be inclusive to ensure that no one is left behind, including the most marginalized and vulnerable communities.

The world needs to build greener economies and societies, while at the same time combating disturbing air quality, loss of biodiversity, CO2 emissions, extreme temperatures and damage to ecosystems. And more resilience is needed to have the right tools to deal with the next major pandemic, environmental disaster or security crisis.

International cooperation, partnerships and global governance – including the strong leadership of the United Nations – are essential to reinforce the recovery after COVID-19.

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