Don't discount the resilience of the Developing World to bounce back
Last week the Financial Times carried a full page feature entitled
“This Crisis is different”. It draws on the analysis of the IMF that contrary to the widely held belief that the pandemic has caused lasting damage to living standards around the world and created a debt mountain that would be a multi-generational burden on the western world, that in fact it the advance economies will emerge large unscathed by the crisis. On the contrary, it says, emerging markets, which now account for 58 percent of the global economy, have been hit hard, including China the engine of recent decades of growth, putting them on a path to significantly lower growth that pre crisis. Overall the EM economies will have shrunk by 4 percent over the crisis through 2024, the IMF predicts.
One could of course argue that the crisis in the developed world has largely benefited the wealthy, with asset price inflation and the explosive growth in the digital economy, but in reality this has impacted a tiny fraction of the population with most middle class people impacted by loss of jobs, loss of opportunity and an immense impact on their livelihoods. It is the lower income bracket, self employed and small business owners that have been hit hardest by the pandemic and governments' mismanagement of it. In the greater analysis, this element of society is it appears being forgotten.
The impact on those in the developing world in the short term seems intolerable, as scenes from the inability of India's health service to cope with large numbers of COVID patients appear to illustrate. However, this is a disease that predominantly kills the elderly and with average live spans extending no more than mid 60s in many developing countries, the excess death rates have not been as alarming as they might have been. The short term damage of the short sighted policies of the wealthiest countries in the world of closing borders, and putting their own economies into recession, has had profound implications for those at the bottom of the income ladder. For those that rely on very modest wages to simply survive, the pandemic has caused mayhem and in many instances starvation and loss of life. When the final reckoning is made however, it wont be the developing countries of the world, born of a deep resilience, and ensuring survival mentality that faired worst. It will be the middle and working classes of the Western world whose future looks most bleak, and where the problems will take the longest to fix.