More than 32 million of the world’s poorest people face being pulled back into extreme poverty because of COVID-19, leading UN economists said on Thursday, highlighting data showing that the pandemic is likely to cause the worst economic crisis in decades among least developed countries (LDCs). COVID-19 could see over 200 million more pushed into extreme poverty, new UN development report finds (Source)

In a call for urgent investment and support from the wider international community, the UN trade and development agency, UNCTAD, warned that the new coronavirus risked reversing years of “painstaking progress” in poverty reduction, nutrition and education.

“The COVID crisis is leading LDCs to their worst economic crisis in 30 years, with per capita GDP (Gross Domestic Product) for the group expected to fall by 2.6 per cent this year ,” said Mukhisa Kituyi, UNCTAD Secretary-General, during a virtual press conference.
In 2019, average earnings per capita in these countries – which are mainly in Africa - was $1,088 compared with the world average of $11,371, the UN agency said, highlighting their weak infrastructure and reduced financial means to withstand economic shocks.
The potentially disastrous fallout from the new coronavirus pandemic could be reversed with urgent investment and support from the international community to help overcome LDCs’ vulnerabilities and improve their manufacturing capacity, Mr. Kituyi insisted.

Turning to concerns about how COVID-19 threatens to push back moves to implement much-needed transformative economic changes in line with the Sustainable Development Goals (SDGs), the UNCTAD chief said that those which had invested most in boosting production capacity were the ones that were likely to weather the global downturn.

The report, which assesses the economic potential and capacity of least developed countries, also highlights what key measures will help them recover better after the pandemic.

The least developed countries report 2020:productive capacities for the new decade
Improve productive capacities of world’s poorest countries for stronger recovery, UNCTAD says
As an example of sustainable industrial change, it cited Uganda’s Kayoola Bus initiative, which has established the domestic production of buses powered mainly by renewable energy, to tackle the environmental and health problems of transport-related air pollution.

In a nutshell:

LDCs have so far been spared from the worst effects of the health emergency, yet the fallout from the COVID-19 pandemic has taken its toll on their economies, rolling back some of the progress made towards sustainable development and possibly leading to long-term damage.

Not only has the crisis laid bare structural weaknesses of LDCs, but also the deep-seated flaws of the international support measures at their disposal. It has also brought back to the fore the pivotal role of productive capacities for a sustainable, inclusive and resilient recovery.

The GDP per capita of least developed countries (LDCs) is projected to contract by 2.6% in 2020 from already low levels, as these countries are forecast to experience their worst economic performance in 30 years. At least 43 out of the 47 LDCs will likely experience a fall in their average income.

Extreme poverty in LDCs is projected to expand by 32 million in 2020, to reach 377 million people. The poverty rate will rise from 32.5% to 35.7% in 2020, due to the COVID-19-induced economic crisis.

Although LDCs account for just 14% of the world’s population, they comprise more than 50% of the world’s extremely poor (i.e. those living on less than $1.9 a day). But the economy of these countries accounts for just 1.3% of the world total. Extreme poverty is defined as having an income lower than $1.90 per day.

The current account deficit of LDCs is forecast to widen from $41 billion (or 3.8% of their collective GDP) in 2019 to $61 billion (or 5.6% of their GDP) in 2020, the highest value ever.

African LDCs continue to face the challenge of diversifying their economies and developing high productivity economic activities. Given the still very significant share of employment in agriculture, these countries have a very high potential for further structural transformation. African LDCs face two contemporaneous challenges: they must strongly accelerate the rhythm of agricultural labour productivity growth; and, substantially generate employment in other sectors for their rapidly growing populations. Moreover, these new jobs need to be of a considerably higher productivity level than those found in their respective agricultural sectors. (page 24)

Key sectors of strategic interest in LDCs, such as agriculture, manufacturing and services, are in urgent need of a reset and 4IR technologies represent an unrealized opportunity. At least three prospects, which will require to be pursued concurrently, are available to LDCs.(read further from page 28)
An LDC post-COVID recovery requires the reform of the international financial architecture and a Marshall Plan