“Global gross domestic product (GDP) is forecast to shrink by 3.2 percent in 2020, with only a gradual recovery of lost output projected for 2021”, the report said. It added that nearly $8.5 trillion in output in 2020 and 2021 will be lost, eliminating the output gains of the previous four years.
If the second wave of COVID-19 infections flares up, the global economy will be diminished by 4.9 percent in 2020, followed by a further 0.5 percent contraction, UNDESA warned.
The agency also projected that skyrocketing unemployment, caused by national lockdowns, will continue to soar across the globe. Meanwhile, more jobs, particularly vulnerable to the restrictions in response to outbreaks, will be destroyed.
“A growing share of economic activities - retail, entertainment, and recreation - will likely move online. Economic activities that cannot shift online will embrace automation to reduce dependence on human labor”, the report said. “Like in any crisis, there will be winners and losers. Firms that invested in digital technologies and training have been relatively more successful in coping with the crisis than those that did not”.
Moreover, the massive losses of employment will force 34.3 million people to live below the extreme poverty line in 2020, with the African continent accounting for 56 percent of the increase. By 2030, the report said, that number could reach 130 million people living in extreme poverty worldwide.
“Declining growth and rising poverty during the crisis and recovery period will likely increase income and wealth inequality, undermine social cohesion, and breed further discontent and instability around the world”, the report added.
The report also warned that if prolonged, the COVID-19 crisis will fundamentally reshape globalization, affecting interdependence among countries, reinforcing mistrust, and disrupting demand for certain services.
Since the first cluster of COVID-19 cases in Hubei Province, China, was reported in late December, the novel coronavirus has infected around 4.2 million people worldwide and killed nearly 290,000, according to the World Health Organization.