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Countries should take COVID-19 recovery steps now: World Bank

The World Bank today, June 2, said countries across the world can now take steps to hasten recovery from the coronavirus (COVID-19) once the worst of the pandemic has passed.

In its Global Economic Prospects report released today, the World Bank said short and long-term responses can be put in place to address health emergency and secure public services through comprehensive policies which to boost long-term growth and expand and improve results from investments in education and public health.

What’s more, countries should work towards creating systems that can help their respective economies be more resilient and which can build and retain more human and physical capital during the recovery.

World Bank Group President David Malpass (Photo: SIKA Finance/LinkedIn)

World Bank Group President David Malpass said “The scope and speed with which the COVID-19 pandemic and economic shutdowns have devastated the poor around the world are unprecedented in modern times. Current estimates show that 60 million people could be pushed into extreme poverty in 2020.”

Malpass added, “These estimates are likely to rise further, with the reopening of advanced economies the primary determinant. Policy choices made today – including greater debt transparency to invite new investment, faster advances in digital connectivity, and a major expansion of cash safety nets for the poor – will help limit the damage and build a stronger recovery. The financing and building of productive infrastructure are among the hardest-to-solve development challenges in the post-pandemic recovery. We need to see measures to speed litigation and the resolution of bankruptcies and reform the costly subsidies, monopolies and protected state-owned enterprises that have slowed development.” 

The coronavirus has infected more than 6.3 million worldwide and forced many nations to implement travel restrictions to contain the virus.

That notwithstanding, deep recessions brought on by the virus pandemic will worsen the slowdown in growth and productivity, which are the main drivers of higher living standards and poverty reduction. “Adding to the inequality problem from slow trend growth, the poor and vulnerable are among the hardest hit by the pandemic and economic shutdown – including through infection, school closures and lower remittance flows,” the report stated.

Further, the pandemic is expected to leave lasting damage including lower investment, erosion of physical ad human capital due to business closures and loss of schooling and jobs.

To counter those effects, the World Bank said policies to rebuild should include strengthening health services and implementing targeted stimulus measures to jump-start growth. “This includes efforts to maintain the private sector and get money directly to people so that we may see a quicker return to business creation after this pandemic has passed,” the report said, adding “During the mitigation period, countries should focus on sustaining economic activity with targeted support to provide liquidity to households, firms and government essential services. At the same time, policymakers should remain vigilant to counter potential financial disruptions.”

The World Bank Group has committed to deploying US$160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, maintain the private sector, and bolster economic recovery.