The coronavirus crisis could cause more than 1.7 million people in the Arab region to lose their jobs in 2020 and unemployment to spike 1.2 percent as the coronavirus pandemic ravages economies and businesses shed jobs at an alarming rate, a policy brief issued by the United Nations Economic and Social Commission for Western Asia (ESCWA) said on Wednesday.
As the coronavirus, officially known as COVID-19, has continued to spread across the world, governments and authorities have responded by shutting borders, closing public places, and sending workers home. This state of affairs is unprecedented for the global economy and is likely to cause a recession, experts have warned, the costs of which have yet to be tallied.
“We are under a global health threat which may alter the world as we know it. Its impact on people’s lives and families, on our children’s education, on our health systems and on our planet are yet to be revealed. But we can start to assess our economic losses and find ways to mitigate them,” said ESCWA Executive Secretary, Rola Dashti said.
The report found that unlike the 2008 financial crisis, employment will be effected across all sectors. The services sector, which includes retail, education, social work, and communications, will be the worst hit with, “estimates point to a reduction by half of service-sector activities,” the report said, as social distancing policies take a toll.
GDP to decline by $42 billion
Arab states’ gross domestic product (GDP) is expected to decline by at least $42 billion in 2020, the policy brief said. The figure could be higher, with the compounding effect of low oil prices and the dramatic slowdown of economies due to the closure of public institutions and private sector enterprises starting mid-March. The longer the lockdown, the higher the cost for the region’s economies.
The ESCWA assessment also suggests that the coronavirus has led to a significant decline in oil prices which, along with recent market tensions due to a Saudi-Russia price war, has cost the region nearly $11 billion in net oil revenues between January and mid-March 2020. The unprecedented halt in trade and global transport is expected to cause a further increase of that figure in the coming weeks as oil prices likely fail to significantly recover.
Also between January and mid-March, the region’s businesses lost a massive $420 billion of market capital, around 8 percent of total market capital in the region. “Policy solutions and swift actions are needed to trigger recovery, based on a comprehensive and integrative approach that leaves no one behind,” added Dashti.
ESCWA recommends that Governments adopt coordinated support measures at the macro and micro levels, the first of which should target enhancing social protection, especially for the poor and vulnerable. Government fiscal policy should also be targeted towards supporting businesses, including through extension of tax exemptions, wage subsidies, deferment of debt obligations, and support to small and medium enterprises, the policy brief concluded.
The coronavirus has infected nearly 250,000 people worldwide, with over 10,000 dead. A little over 86,000 have recovered.
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