5 research outputs found

    Economic vulnerability to the RussiaUkraine War: which low- and middle-income countries are most vulnerable?

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    The global economy is still recovering – modestly – from the pandemic and is now facing significant uncertainty over the ongoing Russia–Ukraine war. It is too early to tell the magnitude of the impacts, which will depend on the duration and the escalation of the war and on the corresponding regional and global responses (e.g. economic sanctions) against Russia. Estimates suggest that the ongoing war will reduce global output by 0.4 percentage point to 1 percentage point (pp) in 2022 (Juanino and Millard, 2022; OECD 2022; Peterson et al, 2022). This will amount to global costs between 380billionand380 billion and 950 billion in 2022.Global shocks can derail the growth and economic transformation trajectories of low- and middle-income countries (L&MICs). While this war is isolated to Russian and Ukraine territories, its impacts on L&MICs will be felt through various channels, such as disruptions in trade and upward pressure in global prices of products (e.g. oil, metals, wheat) of which Russia and/or Ukraine are major global suppliers. For instance, Brent crude oil prices went up by 11% between 25 February 2022 and 1 April 2022, while wheat prices increased by 30% during the same period. Such increase would occur in a context of already rising commodity prices. Global price indices increased for food (11%) and metals and minerals (12%) between December 2021 and February 2022 (World Bank, 2022).This paper quantifies the economic vulnerabilities of 118 L&MICs to the economic effects of the Russia–Ukraine war through different impact channels. In this paper, economic vulnerability to the war at country level is measured as the combination of direct economic exposure to Russia and Ukraine (e.g. through bilateral trade and investment, migrants) and indirect exposure to the global effects of the war (e.g. through levels of commodity imports, trade and investment openness, tourism), minus resilience (e.g. quality of economic governance, capacity for energy transition, food security) to manage the negative impact of shocks that may emerge from the war

    The Evolving Fiscal and Liquidity Stimulus Packages in Response to COVID-19 in Sub-Saharan Africa

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    COVID-19 is taking its toll on Sub-Saharan Africa (SSA). To date, there have been 1.2 million infections and about 30,000 deaths on the continent. The pandemic has widely repressed mobility, disrupted economic production, decreased investment and remittance flows, created massive unemployment and pushed more people into poverty. Meanwhile, many governments increased spending in response to the health and economic crises but, given pre-existing vulnerabilities and limited fiscal space, compounded by an annual COVID-19 financing gap of $100 billion, policy-makers have been grappling with not only mobilising funds but also allocating limited resources to measures that will create the most impact. Utilising the ODI COVID-19 tracker, this note explores the evolution of SSA policy responses from the onset of the pandemic to the present, as well as recovery issues for policy-makers and stakeholders moving forward.IDRC | CRD

    Shaping the Macroeconomy of Low- and Middle-income Countries in Response to Covid-19

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    There is heterogeneity in the magnitude of the pandemic’s shortterm impact across the five low- and middle-income countries (L&MICs) that are the focus of this synthesis paper: Bangladesh, Kenya, Peru, Sri Lanka and Tanzania. Based on pre-Covid-19 forecasts, Peru was supposed to grow by 3.6% but the pandemic led to an actual contraction of the Peruvian economy by 11% – suggesting 15 percentage points loss of growth due to the pandemic. Similarly, Sri Lanka was forecast to grow by 1.5% but the pandemic led to a -3.6% economic contraction in 2020 – the worst in the country’s 73 years of independence. Meanwhile, Tanzania grew by 4.8% in 2020, which is only about 1 percentage point lower than pre-Covid-19 forecasts. Structural characteristics, initial macroeconomic conditions, and the size and quality of policy responses largely shaped the absolute and distributional impact of Covid-19 in the five L&MICs. Impacts from sharp declines in tourism activities in 2020 were offset partly by increased global demand from their major exports of agricultural products (e.g., Kenya, Peru) and gold (e.g., Tanzania). Bangladesh benefitted from a quick recovery of major trading partners’ demand for garments (comprising 90% of Bangladeshi export).IDRC | CRD

    Shaping the Macro-Economy in Response to COVID-19: A Responsible Economic Stimulus, a Stable Financial Sector and a Revival in Exports

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    Ensuring a healthy macro-economy is crucial for a high-quality recovery from Covid-19. Engineering appropriate stimulus packages, keeping a stable financial sector and reviving high value-added exports are core tasks of governments across the world as they also try to recover from the economic effects of the pandemic in 2020–2023. Unfortunately, the context in low-income settings looks more depressed because of lack of finance and more vulnerable economies. Informing policy options for a better macro-economy in lower-income settings is a core task of an International Development Research Centre (IDRC)-funded project undertaken by the Overseas Development Institute (ODI) and five other think-tanks. This paper presents a methodology and a range of methods to provide quality research and analysis that can underpin such policy advice.IDRC | CRD