Analysis & Opinions

This Week in COVID-19 and Economic Diplomacy: ‘Poverty in Asia will Rise for First Time in 20 Years’

| Oct. 02, 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

  • A pre-pandemic Federal Reserve survey found that although family finances increased between 2016 and 2019, inequality also increased.
  • The eurozone’s economic rebound shows signs of slowing as cases rise throughout the bloc. 
  • Poverty in Asia will rise for the first time in 20 years, with 38 million people either remaining or pushed back into poverty due to the pandemic. 

U.S. Developments

European Developments

Emerging Markets

  • The World Bank warned the number of poor people in east Asia will rise for the first time in 20 years. The pandemic is not only hitting the poor the hardest but is creating a “new poor,” with up to 38 million people set to remain stuck or be pushed back into poverty. The bank stated that due to the pandemic 33 million who would have escaped poverty will remain in poverty; an additional 5 million people who were not considered poor would be pushed into poverty. Unless countries liberalize their economies and increase social safety nets, regional growth could decrease by 1 percentage point a year. 
  • Developing economies have raised more than $100 billion on international bond markets, averting fiscal catastrophe. However, analysts warn that while borrowing now may address problems in the short-run, the longer-run economic effects of the pandemic will be difficult to shrug off. For many of the emerging markets, GDP has contracted in the double-digits, and many countries’ public finances have been devastated. Moody’s expects the ratio of debt to GDP to rise by an average of 10 percentage points this year alone in the 19 biggest emerging markets.

Odds and Ends

For more information on this publication: Belfer Communications Office
For Academic Citation: Suh, Hannah.“This Week in COVID-19 and Economic Diplomacy: ‘Poverty in Asia will Rise for First Time in 20 Years’.” , October 2, 2020.

The Author