Argentina, Brazil, India, China: Impact of COVID-19 on the world’s developing economies
When you walk down a parking lot, you see cars of different sizes parked there. Each of them are priced differently too. Think of these cars as economies of every country. Like each of the vehicle vary in their size and price, each of the countries in the world also vary in their area, population and per capita income. Developed nations like the United States, Canada, Japan, Republic of Korea, Australia, New Zealand, Scandinavia, Singapore, Taiwan, Israel, countries of Western Europe, and some Arab states generally has a per capita income of above $12,000. Whereas developing economies of the world like India, China, Brazil, Argentina, Bangladesh, Indonesia have a much lesser per capita income but they are growing fast to catch up with the developed nations.
The global pandemic of COVID-19 has not only created havoc to human lives in terms of health issues and loss of human lives but it has also crippled the overall world economy. While governments were forced to announce complete or partial lockdown of their respective countries in order to save human lives, it brought businesses to standstill hurting income for organization and individuals. The impact on developed countries with higher income and developing countries are of course not the same. Some suffered more than others in this global catastrophe.
Here is a brief look at the world’s top developing economies and how they faced the brunt of the COVID-19 pandemic.
Contrary to popular belief, Argentina is actually considered a developing country. Argentina’s economy was strong enough to ensure its citizens a good quality of life during the first part of the 20th century. However, in the 1990s, political upheaval caused substantial problems in its economy, resulting in an inflation rate that reached 2,000 percent. The country’s economy condition was on the brink even before the pandemic. The country faced a recession and a change of Government in 2019 with new public policies put in place just before the pandemic. This added to the complexity of the already ailing economy when the pandemic struck. The Government chose to implement the strictest quarantine measures across the country even in the early days of the pandemic – much stricter than most of the nations. While this was partially successful to curtail the spread of the virus, this had a major impact on the economy. The country’s economy contracted a record 19.1% in the second quarter versus the same period a year earlier as the coronavirus pandemic crippled production and demand. A central bank poll says, Argentina’s GDP will fall by a net 12% in 2020 due to COVID-19 pandemic.
Brazil is currently working its way out of one of the worst economic recessions in its history. Between late 2014 to early 2016, the country faced a lot of financial turmoil. It only started reversing As a result, its GDP growth has increased by 1 percent and its inflation rate has decreased to 2.9 percent. As Latin America’s largest economy, these GDP improvements have had a significant impact on pulling Latin America out of its economic difficulties and making investors interested. At the beginning of 2020, Brazil had 12.6% unemployment but experts estimated annual economic growth of around 2.3 percent in early 2020. But COVID-19 pandemic played a spoilsport. When the virus struck, the Brazilian President, unlike the Argentinian Government, chose to downplay the risk of virus spread by taking a clear stand of “Economy must come first”. Despite that, The International Monetary Fund projected a decrease in Brazilian economic activity by 9.1 percent in 2020, while the World Bank projects a retraction of 8 percent. The Central Bank of Brazil, however, sees a 6.4 percent retraction in the economy this year.
As the second most populated country in the world, India has run into many problems involving poverty, overcrowding and a lack of access to appropriate medical care. Despite this, India has a large well-skilled workforce that has contributed to its fast-growing and largely diverse economy. But the COVID-19 struck the country’s economy like never before. Indian Government had put in a strict lockdown from mid of March to end of May. Barring a few essential services, the entire country came to a standstill. This resulted in a havoc with an unofficially estimated job loss of over 10 million. A mass exodus of migrant working class moving from cities back to their villages caught the headlines of national and international media houses. Experts predict that this will create a shortage of labour in the cities for next few months even after the vaccines of Coronavirus comes out.
There was a huge decline in government revenues and growth of the income for at least two quarters as the coronavirus hits economic activity of the country as a whole. A fall in investor sentiment impacts privatization plans, government and industry.
As per official data released by the Ministry of Statistics and Programme Implementation, the Indian economy contracted by 23.9% in the April-June quarter of this fiscal year. This is the worst decline ever recorded since India started compiling GDP statistics on a quarterly basis in 1996.
Since China began reforming its economy in 1978, its GDP has had an average growth of almost 10 percent a year. Despite the fact that it is the world’s second-largest economy, China’s per capita income is relatively low compared to other high-income countries. About 373 million Chinese still live below the upper-middle-income poverty line. Overall, China is a growing influence on the world due to its successes in trade, investment and innovative business ventures. So, it is not surprising that China managed to hold steadier than other economies of the world during and after the pandemic. Most of the domestic and foreign institutions who made economic forecasts believe that as soon as the pandemic ends the annual GDP growth will show a “V-shaped” pattern of recovery from the temporary slump that it witness during the pandemic.