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Business News of Monday, 12 April 2021

Source: business24.com.gh

Coronavirus crisis to leave long term social and economic scars - UN report

The 2021 World Economic Situation and Prospects (WESP) report has cautioned businesses not to expect in-person interaction to return to normal even if millions are vaccinated against COVID-19, a situation the report said is likely to reduce governments’ revenues.

The report, prepared jointly by the United Nations Department of Economic and Social Affairs (UN DESA), United Nations Conference on Trade and Development (UNCTAD) and the five United Nations Regional Commissions, predicts that remote work will likely become the new norm for many service sector jobs, adding that meetings and conferences may remain largely digital, reducing demand for business travel-related services.

“Consumer spending will increasingly move online. Leisure and entertainment will also become increasingly digital, replacing brick-and-mortar venues for retail and entertainment. These shifts will likely reduce local government revenues and adversely impact the delivery of basic services—health, sanitation, education, transportation and public safety—in urban centres worldwide,” the report said.

In a post-COVID-19 world, the report predicted that firms and sectors that can quickly adapt digital technologies would likely fare better, while making many existing jobs redundant.

This, it said, will likely widen wage and income inequality both within and across sectors.

While there will be increases in marginal productivity in those sectors, average productivity growth in the global economy will likely remain subdued. Lower average productivity growth will translate to lower output growth, it added.

The report noted that the current crisis is causing a rise in unemployment, poverty and inequality, which threatens to wipe out the development gains of recent decades.

For example, the crisis is severely impacting tourism-dependent economies, as tourism accounts on average for more than 25 percent of employment and 15 percent of GDP in these countries.

“The effect on unemployment rates, poverty and inequality is clearly visible. Amid restrictions on international travel, potential tourists’ fear of contagion and renewed waves of infection worldwide, the outlook for these economies is bleak,” it warned.

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