UNCTAD in its article on March 9, 2020 suggested the Covid-19 crisis may cost the global economy USD1 trillion in 2020. “We envisage a slowdown in the global economy to under two per cent for this year, and that will probably cost in the order of $1 trillion, compared with what people were forecasting back in September,” said Richard Kozul-Wright, Director, Division on Globalization and Development Strategies at UNCTAD.
One “Doomsday scenario” in which the world economy grows at only 0.5 per cent, would involve “a $2 trillion hit” to gross domestic product. The collapsing oil prices had been “a contributing factor to that growing sense of unease and panic”.
While it was difficult to predict how the international financial markets will react to COVID-19’s impacts “what they do suggest is a world that is extremely anxious”, he said.
To counter these fears, “Governments need to spend at this point in time to prevent the kind of meltdown that could be even more damaging than the one that is likely to take place over the course of the year”, Mr. Kozul-Wright insisted.
What about Malaysia?
The new Finance Minister is still grappling with issues. Hopefully he can move quickly. He has to forget public debt to GDP ratio by requesting for an exemption to the cap of 55% (It is now at 52.5%). He has to devise spending strategies at Federal, State and local governments. At Federal level, it could be the major infrastructure projects, at state level affordable public housing and at local level repairs and improvements to roads, PPR flats and the like.
Then we may have an economy moving forward, despite Covid-19!
Coronavirus update: Covid-19 likely to cost economy $1 trillion during 2020, says UN trade agency, 9 March 2020 (https://news.un.org/en/story/2020/03/1059011)