• MAP Asia Pacific Ltd

Why Covid was harder on big economies

On March 11, 2020, the WHO declared Covid-19 a global pandemic. Since then, as on May 26, 2021, the world has seen as many as 16,95,97,415 positive cases and 35,30,582 casualties. It has spared none; world’s largest economies, fast growing economies, emerging economies, poor economies, name any and they will have dreadful accounts on how the pandemic has created havoc in almost all of them.

As an obvious consequence of lockdowns and other prohibitive measures, in 2020, the world GDP declined by about 3.3 per cent. For advanced economies, the dip is deeper (4.7 per cent) when compared to emerging economies (2.2 per cent). While in absolute term, the setback for advanced nations seems more prominent, a marginal shrinkage in growth for developing economies seems to hit harder.

According to World Bank estimates, the pandemic has pushed about 120 million into abject poverty in the low and middle income countries. The International Labour Organization (ILO) report paints a grim picture with 6.47 per cent unemployment rate and a whopping 8.3 per cent decline in labour income in 2020. ILO estimates also project loss of 90-130 million full-time jobs in developing economies during 2021.

Though assessing the impact of Covid-19 on economic activity is a five-finger exercise, it is critical to analyse if the development profile of a country has any bearing on how it impacted human lives. In a narrower sense, development profile may be synonymised to income. But with the general understanding that development is a much broader notion than income, a comparative analysis of the top 10 countries based on GDP (World Bank data for 2019 at PPP: China, US, India, Japan, Germany, Russia, France, Indonesia, UK and Brazil) and HDI (UNDP report 2020 for 2019: Norway, Switzerland, Ireland, Iceland, Germany, Sweden, Australia, Netherlands, Denmark and Singapore) becomes an imperative call.

Results from our analysis reveal that the world’s largest 10 economies accounted for about 58 per cent of the total positive cases, whereas the total share of the top 10 HDI (Human Development Index) countries was as low as 5 per cent. Arguably. the number of positive cases may not be a suitable indicator to judge efficacy of a nation in handling the pandemic but the share of deaths in the respective groups will definitely be more revealing.