The Economic Impact of COVID-19: After Record Unemployment, Countries around the World Begin to Reopen Industries

The International Labour Organization reports that “over one in six young people surveyed have stopped working since the onset of the COVID‑19 crisis” and that working hours have declined by “10.7 per cent relative to the last quarter of 2019, which is equivalent to 305 million full-time jobs.” (ILO)

“Global remittances sent by migrants back home to low- and middle-income countries is projected to be one of sharp decline – a fall by about one fifth this year. The estimated 20 per cent slump represents US$ 109 billion in 2020.” (UNCDF)

Gentilini rounds up an array of resources to examine social safety net responses to COVID around the world.

“Ethiopia’s economy is now expected to grow by 5-6% in 2019/2020… from a previous forecast of 9%.”  Parliament approves an additional supplementary budget for the country. (Reuters)

“Namibia’s economy is likely to contract by 6.6% in 2020 and by 1.1% next year as the COVID-19 pandemic hits economies globally,” according to the finance minister. (Reuters)

A household survey in Kenya reports that more than half of working women “have been rendered jobless by the coronavirus pandemic.” (AllAfrica)

Tesfaye, Habte, and Minten interview 100 commercial and small dairy farmers in Ethiopia to assess impact of COVID-19 restrictions on the dairy industry: consumption of dairy went down from 56 percent to 45 percent except for households in the richest quintile, partly due to fear of getting infected through consumption of dairy. (IFPRI)

East Africa faces threats from the pandemic, locusts, and now, the worst floods in 40 years. (McCoy)

“De Beers is working with Botswana’s government to temporarily move viewings to places closer to international diamond centres, with sales still recorded in the country, to try to restart trading hit by coronavirus travel restrictions.” (Benza)

Digital payments in Kenya dropped for education-related payments and digital payments related to the hospitality and tourism industry, but has increased for agribusinesses and cooperative payments, food and grocery payments, pharmacies, and utilities. (Mburu)

“Uganda will lose $1.6 billion a year in earnings from tourism as visitors stay away due to the impact of the coronavirus.” (Biryabarema)

The African Development Bank “approved a loan of 88 million euros to Senegal…in support of the costs of its national COVID-19 Economic and Social Resilience Program.” (Africa News)

Angola is negotiating with lenders “to reschedule debt payments after a prolonged recession triggered by a drop in crude prices.” (Mendes and Almeida)

Namibia, which “has received international praise” for low number of infections and no deaths, is set to reopen its economy in the next few days. (Nyaungwa)

In Ghana, “the 21-day lockdown of Ghana’s biggest cities had become financially unbearable for most of the population, a concern that gave the government little choice but to lift the restriction.” The country face massive debt repayments and the long-term economic fallout from the pandemic. (The Africa Report)

“South Africa partly lifted a two-month-old coronavirus lockdown… letting people outside for work, worship, exercise or shopping, and allowing mines and factories to run at full capacity to try to revive the economy.” (Al Jazeera)

Kenya disburses over $9.4 million “to those adversely affected by this COVID -19 pandemic.” (Devdiscourse)

Ethiopia approves an additional $1.4 billion for the current fiscal year to “serve as a shield against the impact of the coronavirus pandemic.” (Nourou)

“Nigeria’s central bank unexpectedly cut its benchmark lending rate to 12.5% from 13.5%.” (Akwagyiram)

Ivudria writes that the remittance gap in sub-Saharan Africa left by the pandemic “exposed one of the biggest flaws in the system: an over reliance on cash at the expense of digital transactions.” (EABWNews)

Nigerians who are working in the informal sector (almost 80 percent of the population) are the hardest hit, and government help has been inadequate. (Ayeni)

Were and Ng’weno examine how Kenyan cuspers—“people on the cusp of escaping poverty but still at risk of falling back into it”—can recover following the coronavirus crisis. (FSD Kenya)

Dube and Katende discuss World Bank responses to COVID-19 for Africa’s informal workers, especially women: “In a health, social, and economic crisis of this scale, no single intervention is enough, and African countries need a “whole of society” approach. Community-driven development platforms, which put citizens at the center of designing their own solutions, are a critical part of the World Bank’s response.” (World Bank)

Lakuma and Sunday lay out the impact of the pandemic on micro, small, and medium businesses in Uganda. Despite no recorded COVID deaths, “three-quarters of the surveyed businesses have laid off employees due to the risks presented by COVID-19 and subsequent containment measures.” (Brookings)

Uzochukwu et al. write on Nigeria’s moving out of lockdowns that “[the country] needs to balance controlling the spread of the disease with avoiding the worst outcomes of the response, like school closures and the crowding out of non-COVID essential health services.” (CGD)

“India’s economy grew by 4.2% in the fiscal year that ended in March, down from 6.1% the previous year…and is likely to contract this year because of the coronavirus pandemic.” (Associated Press)

Cambodia’s economy will likely shrink between 1 percent and 2.9 percent this year, which will be “its slowest growth since 1994.” (World Bank)

Unemployment in Southeast Asia has “spiked to almost unprecedented levels.” “In Laos, where the formal unemployment rate was around 0.7% last year, joblessness has recently spiked to around 25%... Unemployment rates have risen to a ten-year high in Vietnam… In Thailand… the unemployment rate could climb to almost 25% if the economic crisis lasts for several more months.” (Hutt)

“Deep household debt might soon push Cambodia into a crisis as job losses caused by COVID-19 make it even harder for families repay loans.” (Bopha and Sokummono)

“Export powerhouses Japan and South Korea [suffer] the sharpest declines in business activity in more than a decade,” even as China’s factory activity recovers. (Kihara)

An Ernst and Young survey reports that “Malaysian businesses anticipate Covid-19 will have a prolonged and deeper impact on the economy and will likely consider strategic mergers and acquisitions to accelerate growth.” (Malay Mail)

The Food and Agriculture Organization of the United Nations warns that, similar to Africa, the swarms of desert locusts currently attacking Iran and Pakistan and threating crops in India will add to the burden of dealing with food insecurity due to the pandemic restrictions, in addition to the recent outbreak in African swine fever and fall armyworms. (UN FAO)

In India, “the forecast of a normal monsoon and its timely onset” is “expected to mitigate some impact of coronavirus on Indian economy.” (Parija)

Also in India, some states have suspended most labor laws “in a bid to draw investment and boost industry in the aftermath of the coronavirus pandemic.” (DW)

Malaysia’s auto sales dropped by 99 percent in April compared to the same month last year. (Nakano)

The International Monetary Fund has approved $732 million in emergency assistance for Bangladesh. (IMF News)

The World Bank approved “a US$500 million loan to help the Philippines mitigate the impact of COVID-19 pandemic on poor and vulnerable households.” (World Bank)

“Singapore expects to have most, if not all, of its economy back on track by June.” (Choudhury)

“The Philippine government lifted some of its strictest coronavirus containment measures… [in] a bid to salvage an economy battered by unemployment and new signs of poverty.” (Jennings)

Despite increasing cases, India is lifting its lockdown and reopening its economy. (Schultz and Yasir)

“Indonesia is pushing ahead to reopen its economy amid a surge in coronavirus infections, with the government seeking to minimize job losses and the threat of social unrest.” (Salna, with similar reporting by Maulia)

Laos is starting to ease restrictions and open its economy. (Eureporter)

“Thailand’s parliament passed a 1.9 trillion baht ($58 billion) economic support package...to ease the impact of the coronavirus.” (Tanakasempipat)

“Thailand plans to boost domestic tourism in the third quarter to help support the struggling economy.” (Reuters)

Similarly, Indonesia has released a “Cleanliness, Health, and Safety program…as a strategy to accelerate the recovery of tourism and creative economy sector.” (PR Newswire)

Vietnam has curbed the virus and is reopening its economy. (VOA)

“Vietnam plans a 15.84 trillion dong (S$970 million) cut in corporate income tax for small-sized enterprises this year to help them overcome the impact of the coronavirus pandemic.” (Straits Tines)

Southeast Asian countries such as the Philippines, Indonesia, and Thailand have “turned to new and higher taxes to offset falling government revenues due to the coronavirus pandemic, walking a fine line between securing funding and further straining economies.” (Endo)

“India’s central bank surprised markets by cutting its key lending rate, hoping to reignite growth.” (Agarwal)

Pacific Island nations face unique challenges: “small in size, geographically remote, vulnerable to extreme environmental shock and limited in economies of scale.” “Travel and tourism — a principal economic driver — have come to a screeching halt, and countries like Fiji and Vanuatu could see their gross domestic product fall by almost 50 percent.” (Ellis)

Similarly, the IMF also warns of the economic collapse of Pacific Island countries: “Shrinking global demand is also affecting the islands dependent on commodity and other exports—particularly those depending on oil and gas for revenue. And supply chain disruptions—including in the fisheries industry—continue to hinder the islands dependent on this sector, including for the licensing revenues.” (IMF Country Focus)

In a blog, Holmemo underscores the importance of social protection for Indonesia especially during the crisis and provides suggestions on how the country can build on its social insurance system. (World Bank)

Nguyen and Malesky offer an analysis on how Vietnam’s improving governance has helped it weather the pandemic. (Brookings)

The Institute of International Finance estimates that “the economy of the energy-exporting Gulf Cooperation Council region will shrink 4.4% in 2020, with Oman having the worst contraction of 5.3% among the six countries.” The region consists of Saudi Araba, Kuwait, UAE, Oman, Qatar, and Bahrain. (S&P Global)

Palestinian economy is expected to decline by “at least 7.6 percent, based on a gradual return to normality from the containment, and up to 11 percent in the case of a slower recovery or further restrictions due to another outbreak.” This is down from a pre-coronavirus growth projection of 2.5 percent. (World Bank)

“Israel’s economy contracted by an annualised 7.1% in the first quarter…with the coronavirus outbreak hitting trade, investment and consumer and government spending.” (Reuters)

“The COVID-19 crisis is expected to lead to a 46.4 percent decline in Tunisia’s GDP during the 2nd quarter of 2020 (April to June). The industrial sector will be hit hardest, with output falling by 52.7 percent, followed closely by services (-49.0 percent) and agriculture (-16.2 percent).” (ElKadhi et al.)

Morocco’s finance minister estimates that “the country loses up to MAD 1 billion ($100 million) during each day under lockdown, noting it is expected that the two months of quarantine will cause the national economy to lose 6 points of GDP growth for 2020.” (Guessous)

Egypt’s economic minister reports that the “unemployment rate has risen to 9.2 percent as a result of the economic repercussions of the coronavirus.” (Egypt Independent)

“Money transfer providers in six governorates across Yemen told Oxfam they had seen the number of remittances drop by as much as 80 per cent between January and April this year.” (Ekklesia, and reported by Oxfam)

“Egypt's non-oil private sector activity shrank more slowly in May after turning in its worst performance in a decade the previous month,” but still not reaching the threshold to be considered in contraction. (Werr)

Travel restrictions shut down tourism in Marrakesh, and affected business owners. (Marketplace)

“The Arab Monetary Fund extended a new loan facility worth $59 million (Dh217m) to Tunisia to strengthen the country’s financial position in the wake of the coronavirus pandemic.” (Rahman)

“The African Development Bank approved…the financing of €264 million for Morocco, as part of its COVID-19 response support program.” (Mebtoul)

“The European Union transferred a grant of MAD 1.7 billion (€157 million) to Morocco…to aid in the country’s COVID-19 response.” (Kasraoui)

“The U.N. humanitarian chief is urgently appealing for $2.4 billion to help millions in war-torn Yemen… saying programs are already being cut and the situation is "alarming."” (StarTribune)

Algeria removed the 51/49 majority ownership rule as part of the country’s economic recovery plan. (M’Bida, also reported by Reuters)

“Saudi Arabia unveiled a $13.3 billion stimulus package to protect banks against an expected drop in profits and rise in bad loans.” (Martin)

“Oman announced it will not renew the contracts of the majority of its foreign consultants working in government” in a bid to curb public spending. (Al-Monitor)

“Iran is rolling back coronavirus restrictions as it attempts to revive its battered economy, despite a surge in new infections.” (Rasmussen)

Turkey reopens its economy including restaurants and cafes in a bid to curb the economic impacts, especially the tourism industry. (Tavsan, also reported by OANN)

Egypt joins other countries in reopening: “Egypt has started operating its hotels once more after almost a month and a half of closure due to coronavirus, amid hopes that the move will put the tourism sector back on track.” (Emam)

“Egypt will deduct 1% from people’s salaries for 12 months beginning on July 1 to offset the economic repercussions of the coronavirus.” (Reuters)

Chile’s economy had its worst month in recorded history in April of this year. Experts are predicting a continuation in the May numbers. (El Economista)

The Mexican economy had its worst decline in 11 years between January and March, and experts are predicting a slow recovery. (Reuters)

Peru’s economy could have its worst economic contraction in a century and be the worst-hit economically in the region, warns Peru’s Credit Bank. (RPP)

Brazil’s economic growth was 1.5 percent lower in this first trimester of this year relative to last year. (UOL)

The Honduran economy contract by 1.3 percent in the first trimester of 2020, its first contraction since the financial crisis of 2009. (Agencia EFE)

Argentina has already been in recession for two years. March 2020 saw economic performance that was 11.5 percent worse than March of the year before. (DW)

As a result, Argentina was the first country to suspend payments, making it “the first sovereign bankruptcy of a country since the global economic crisis due to the pandemic began.” (Mur)

12.5 million Mexicans lost their jobs in April. (Téllez)

Brazil lost 1.1 million formal jobs between March and April. (Martello)

1.6 million Colombians lost their jobs in April, with two thirds in urban areas. (infobae)

The latest estimates for Mexico’s growth are an 8 percent contraction for 2020. (infobae)

One set of estimates is putting the contraction in Peru at between 12 and 20 percent for 2020. (Publimetro)

Poverty in Peru could rise to 30 percent, consistent with 3 million people falling into poverty. (RPP)

El Salvador’s debt was already 70 percent of GDP in 2019. That will skyrocket when combined with an economic contraction. (Cantizzano)

Industrial production in Brazil was down nearly 19 percent in April relative to April 2019. (Istoé Dinheiro)

Peru’s largest productive sectors fell dramatically—between 30 and 58 percent—in April, with big drops in the production of iron, tin, zin, lead, silver, and gold. (El Diario)

The president of Brazil’s central bank argues that no other country was hurt more by the currency devaluation provoked by the COVID crisis. (Correio Braziliense)

That’s consistent with the news that “Brazil experienced its most aggressive deflation for at least 26 years in May.” (McGeever)

Exports from Latin America and the Caribbean are down 3.2 percent in the first trimester of 2020, relative to the same period last year, exacerbating a trend that was already happening, according to new numbers from the Inter-American Development Bank. (La Jornada)

For this year, the World Bank is predicting a fall in remittance income in Latin America and the Caribbean of 19.3 percent, ending a ten-year streak of increasing remittances each year. (France24)

In March, Peru’s commercial sector fell by more than 20 percent, with big drops in household goods, construction materials, computers, and clothing. “The sale of food, drink and tobacco grew.” (RPP)

The tourism industry is starting to reopen around the Caribbean, but a number of countries are requiring COVID tests from visitors. (Charles)

Automobile sales in Colombia are still down in May, but not as bad as in April. (Reuters)

Honduras will begin to open businesses from June 8. (Corchado)

After two and a half months of stoppage, Venezuela is partially opening industries. For the first time in history, gasoline will be sold at international prices. (Sánchez)

Panama is also allowing the construction and mining industries to reopen this week. (El Mundo)

Peru’s commission for production, micro-enterprise, and small enterprises received proposals from around the country’s regions for how to safely open the economy in the midst of the pandemic. (Notimex)

The IMF announced an additional $223 million for Honduras to respond to the crisis. (Reuters)

Jamaica’s Minister of Finance and Public Service—Nigel Clarke—explains the countries social and economic support program, including grants to unemployed and self-employed workers. (IMF News)

What does it take to open the economy safely? Veillard, Brown, and Becerra propose key indicators that can help governments decide. (World Bank)

There is a temptation to abandon environmental regulations in the service of getting economies back on their feet. There will also be limited financing available. “For all these reasons, it is so important to take sustainable and ‘climate-proof’ economic recovery measures, not the usual ones.” Bárcena and Heileman lay out six candidate measures. (El Tiempo)