Analysis & Opinions

This Week in COVID-19 and Economic Diplomacy: ‘A Half-Finished Bridge'

| Aug. 27, 2020

Our weekly COVID-19 and Economic Diplomacy tracker looks at policies that impact the coordination of international governments and central banks, ongoing commentary and analysis, and asks what these turbulent times mean for economic diplomacy. 

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The Highlights

  • The WHO established COVAX, a facility to accelerate and equitably distribute vaccines as the organization warns against vaccine nationalism. 
  • As the U.S. economy has yet to recover 60% of jobs lost and a potential $70 billion cut in monthly disposable income, analysts are concerned that the lack of a Congressional deal and fiscal policy support will exacerbate the economic fallout in the U.S.
  • Fed Chair Jerome Powell announced that the Fed will focus on keeping unemployment low and allow inflation to run higher than the current 2% target. 
  • Though the UK exceeded £2 trillion in public debt, its GDP is expected to increase 14.3% in the third quarter. However, weaknesses in its labor market threaten mass unemployment exceeding the predicted 12% unemployment rate.
  • Latin America’s GDP is expected to drop 8.2% this year with a 3.5% growth. It continues to face challenges to its economic recovery as chronic weaknesses pre-pandemic have only worsened the region’s economic downturn.

Global Developments

U.S. Developments

European Developments

Emerging Markets

  • Chronic weaknesses in Latin America will keep the region as the worst performer in the developing world. The region has been the global epicenter of the pandemic since June, accounting for 40% of the world’s new COVID-19 deaths despite only having 8% of the world’s population. Lockdowns and travel restrictions, trade reduction, foreign investment outflows, and lower remittances dealt a “triple sudden stop” in the economy. GDP across the region is expected to decrease 8.2% this year and will grow only 3.5%.  According to Eric Parrado, chief economist at the Inter-American Development Bank, “Latin American and the Caribbean in 2020 is like a plane flying with two broken engines. The first broken engine relates to all the preexisting economic problems - social crisis in several countries, low productivity and growth and political polarizations - and the second is related to the pandemic.” 

Odds & Ends

For more information on this publication: Belfer Communications Office
For Academic Citation: Suh, Hannah.“This Week in COVID-19 and Economic Diplomacy: ‘A Half-Finished Bridge'.” , August 27, 2020.

The Author