Coronavirus set to scar world economy for decades amid an uneven, unequal recovery, observers say

Japan, Germany and Australia are seen as among the best-placed economies to deal with pandemic’s fallout, while the Philippines is one of the most vulnerable

Last year’s decline in global GDP was the worst since the Great Depression, costing some 255 million people their jobs and shrinking the world’s middle class for the first time since the 1990s

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A homeless man is seen lying on the ground in Barcelona on Friday. Spain is one of the economies most vulnerable to long-term scarring from the pandemic, observers say. Photo: AP

Published: 10:02am, 18 Apr 2021Updated: 10:01am, 18 Apr 2021

Just as some patients recovering from Covid-19 suffer long-lasting symptoms, it is becoming clear that the same will be true for the global economy once this year’s V-shaped rebound fades.

While US$26 trillion worth of crisis support and the arrival of vaccines have fuelled a faster recovery than many anticipated, the legacies of stunted education, the destruction of jobs, war-era levels of debt and widening inequalities between races, genders, generations and geographies will leave lasting scars, most of them in the poorest nations.

“It’s very easy after a gruelling year or more to feel really relieved that things are back on track,” said Vellore Arthi of the University of California, Irvine, who has examined the long-term health and economic hit from past crises. “But a lot of the effects that we see historically are often for decades and are not easily addressed.”

People wearing face masks shop in Yokohama earlier this month. Japan is seen as one of the best placed economies to weather the pandemic. Photo: Kyodo

All told, the decline in gross domestic product last year was the biggest since the Great Depression. The International Labour Organization estimates it cost the equivalent of 255 million people full-time jobs. Researchers at the Pew Research Centre reckon the global middle class shrank for the first time since the 1990s.

The costs will fall unevenly. A scorecard of 31 metrics across 162 nations devised by Oxford Economics Ltd. highlighted the Philippines, Peru, Colombia and Spain as the economies most vulnerable to long-term scarring. Australia, Japan, Norway, Germany and Switzerland were seen as best placed.

“Getting back to the pre-Covid standard will take time,” said Carmen Reinhart, the World Bank’s chief economist. “The aftermath of Covid isn’t going to reverse for a lot of countries. Far from it.”