Before the pandemic, the world economy was expected to grow by 2.5%.
The UN Department of Economic and Social Affairs warned in its report that, at best, a moderate decline in private consumption, investment and exports will be offset by increased government spending in the seven largest industrialized countries and China, leading to a 1.2% increase in the global economy. 2020 year.
In the worst case, the global economy will shrink by 0.9% “based on demand shocks of various magnitudes” in China, Japan, South Korea, the United States and the European Union, as well as a 50% reduction in oil prices.
This scenario “assumes that large-scale restrictions on economic activity in the EU and the US will remain in effect until the middle of the second quarter,” the report said.
Measures to control the spread of the virus, such as restrictions on movement and quarantine in Europe and North America, “are a severe blow to the service sector, especially in industries that include physical interactions, such as retail, leisure and hospitality, leisure and transportation “. These industries account for more than a quarter of all jobs in these countries, and as these businesses lose revenue, unemployment is likely to increase dramatically.
The report also says that the negative effects of economic constraints in richer developed countries will soon spread to developing countries that will face reduced trade and investment.
Developing countries, especially those that depend on tourism and commodity exports, also face increased economic risks, including the growing likelihood of a “debt crisis” for many commodity economies.
Earlier this week, the UN called for $ 2.5 trillion to help developing countries cope with the effects of the COVID-19 pandemic.
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