The United Nations system and partner international organizations have recently outlined measures to address the impact of the unfolding global recession and financial turmoil in the recent 2020 Financing for Sustainable Development Report.
To avoid this scenario, it is critical that policy makers take appropriate immediate and medium-term measures for post-pandemic recovery. The response to COVID-19 by large fiscal, monetary, and financial policy stimulus to solve the crisis will, therefore, drain domestic resources from financing the SDGs. But even before the pandemic, the Asia-Pacific region has experienced weakening private investment and falling tax revenues. The region still has fiscal space to mitigate the costs imposed by COVID-19, with the median fiscal balance still less than -1 per cent and debt to GDP ratio well below 40 per cent. Of more immediate concern is the COVID-19 crisis impact on fiscal position, which exacerbates the risk of a new debt crisis in the region. In Asia and the Pacific alone, the drop in global demand will cost an estimated US$172 billion from trade alone, equivalent to 0.8 per cent drop of the gross domestic product (GDP) of the region. Global growth is projected by the International Monetary Fund (IMF) to fall to -3 per cent this year, making it the worst recession since the great depression and much worse than during the 2008-09 financial crisis. Just in the first three months, investors moved around US$90 billion out of emerging markets, the largest outflow ever recorded. The pandemic has led the global economy to a new conundrum. This is certainly not good for achieving the Sustainable Development Goals (SDGs) where prior to this crisis, the world was already falling behind in efforts to achieve them. We have also witnessed the tremendous magnitude and speed of collapse in economic activity– something unseen in our lifetime. The year 2020 has witnessed an unprecedented COVID-19 crisis where many human lives have been lost.
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