Lecture One :The Economic

Impacts of the COVID-19

The Economic Impacts of the
COVID-19
How did the COVID-19 pandemic impact global economic inequality?

What were some of the successful economic policy responses to the crisis?

How did the pandemic reveal and worsen economic fragilities in emerging
economies?
The COVID-19 pandemic impact
global economic inequality
1. Increase in Inequality: The pandemic led to a dramatic increase in
inequality within and across countries. Disadvantaged populations
experienced disproportionate income losses, resulting in a rise in inequality.

2. Impact on Vulnerable Groups: Income losses were larger among youth,

women, the self-employed, and casual workers with lower levels of formal
education. Women, in particular, were more affected by income and
employment losses due to their higher representation in sectors heavily
impacted by lockdowns and social distancing measures.

3. Global Poverty: Global poverty increased for the first time in a generation
as a result of the pandemic, further worsening economic disparities
The COVID-19 pandemic impact global
economic inequality Count.......

4. Uneven Recovery: The recovery from

5. Impact on Businesses: Smaller firms,
the crisis is expected to be uneven, with
informal businesses, and enterprises with
emerging economies and economically
limited access to formal credit were hit
disadvantaged groups requiring more
more severely by income losses,
time to recover from the income and
highlighting the vulnerability of certain
livelihood losses caused by the
business sectors to economic shocks
pandemic.
Successfu
l
Several successful economic policy
Economic responses were implemented to mitigate the
impact of the COVID-19 crisis:
Policy • Swift Government Responses: Governments around
the world swiftly implemented a range of policy tools in
Response response to the crisis. These tools included direct
income support measures, debt moratoria, and asset
purchase programs by central banks
s • Unprecedented Policy Tools: Many policy tools used
during the crisis were either entirely unprecedented or
had never been deployed on such a large scale in
emerging economies. This included large direct income
support measures and debt relief programs
Successf 3. Support for Households and Businesses: Governments
provided support to households and businesses through cash
transfers and financial policy tools like debt moratoria. These

ul
programs helped prevent insolvencies and stabilize the financial
sector 6.

Economi 4. Central Bank Interventions: Central banks played a crucial

role by lowering interest rates and easing liquidity conditions. This
made it easier for financial institutions to refinance themselves and
continue supplying credit to households and businesses 6.

c Policy
Respons
5. Preserving Government Ability to Support Recovery:
Policymakers focused on addressing risks arising from high levels
of government debt to ensure governments could effectively
support the recovery. This included maintaining the ability to

es invest in social safety nets to counteract the impact of the crisis on

poverty and inequality
The pandemic reveal and worsen economic fragilities
in emerging economies

The COVID-19 pandemic revealed and worsened economic fragilities in

emerging economies in the following ways:
❖ Income Losses: As the pandemic unfolded in 2020, many households and
firms in emerging economies were ill-prepared to withstand the income
losses caused by the crisis. This exposed preexisting vulnerabilities and
weaknesses in these economies
❖ Fiscal Response Variability: The fiscal response to the crisis varied
substantially across middle-income countries, reflecting differences in the
ability and willingness of governments to spend on support programs. This
variability highlighted challenges in addressing economic shocks effectively
The pandemic reveal and worsen economic fragilities
in emerging economies

❖ Debt Sustainability Concerns: The large crisis response led to a global

increase in government debt, raising concerns about debt sustainability in
emerging economies. In 2020, many countries, including a significant
number of emerging economies, experienced downgrades in their
government debt risk rating
❖ Financial Risks: The interconnected balance sheet risks among households,
firms, financial institutions, and governments became more pronounced
during the crisis. Elevated financial risks in one sector could spill over and
destabilize the economy as a whole, impacting the financial health of various
entities
❖ Impact on Businesses: Smaller firms, informal businesses, and enterprises
with limited access to formal credit were hit more severely by income losses
 REFRENCES

1. https://www.worldbank.org/en/publication/wdr2022/brief/chapter-1-introduction-the-economic-impact
s-of-the-covid-19-crisis