Covid: world’s winners and losers
RAMPANT INEQUALITY: RICH NOW RICHER
China could overtake the US as the world’s largest economy within five years, twice as fast as previously predicted.
Covid-19 has crippled the world economy. While many governments pumped trillions of dollars into their economies to prevent greater damage, a 2021 recovery is very uncertain.
Many of the world’s richest nations may not fully rebound until earliest 2022.
Advantage Asia
The speed at which the pandemic can be contained will have a huge bearing on how the world economy performs.
Even rich countries that have secured vaccines may fail to inoculate enough people to provide herd immunity until end 2021. In developing countries, where vaccines will generally be scarce, the virus is expected to spread further.
The big winners are likely to be countries like China and South Korea that suppressed Covid-19 early.
China’s economy is projected to grow in 2021 by 8%, over twice that of the most successful western countries pre-pandemic.
China’s export-led economy has benefited from western lockdowns, with increased demand for household consumer goods and medical supplies.
China’s also expanding its Asian economic influence, with a new free trade area in the Pacific and infrastructure projects along trade routes to Europe and Africa.
Harder times elsewhere
For rich countries such as the US, UK and those in mainland Europe, the picture iss less rosy.
After brief recoveries in summer 2020, their economies stagnated, driven as much by the second Covid-19 wave as lockdowns. Even with some recovery next year, these economies are expected to be 5% smaller in 2022 than if the crisis hadn’t occurred.
The biggest losers of 2021, however, are likely to be developing countries.
They lack the economic resources to acquire enough vaccines, and the public health systems to treat Covid patients. They also can’t afford the huge government subsidies that have prevented mass unemployment in Europe and the US.
With demand for their raw materials crippled by Western recession and little aid available from rich countries to alleviate debts, they can’t afford further lockdowns.
South Africa may have left it too late to obtain enough vaccines to stem the rapid rise in infections. It has taken a collective approach by becoming a Covax programme member … [which is] yet to achieve results.
New divide
The pandemic’s economic effects have been hugely varied across society
Those in full-time work, often highly paid and working from home, have accumulated substantial savings.
The very rich, especially in the US, have benefited from huge stock market increases driven by pandemic successes like Amazon, Netflix and Zoom, set to continue.
In contrast, many who have lost jobs or businesses or been furloughed will struggle to find new work or return to previous income levels.
The inequality could increase as rich governments scale back huge subsidies used to keep many workers employed or furloughed.
Social unrest has been one consequence of previous pandemics. Let’s hope this time we … tackle the gross inequalities revealed by Covid-19, and build a fairer world.