Looming global recession means we need social programs now more than ever

International Monetary Fund (IMF) chief Kristalina Georgieva. Source.

The International Monetary Fund’s newest estimate is that the global economy will shrink 4.4% in 2020: the worst annual drop since the Great Depression. No country has escaped the negative economic impacts of coronavirus, but certain regions and segments of the population have been disproportionately impacted by the disease. It is more necessary than ever to have governments fund policy interventions in order to help those most affected and prevent the crisis from causing even more harm.

Economic analysis done by the IMF has found that the economies of developing countries are doing worse than expected due to a resurgence of COVID-19 in regions such as Latin America, India, and South Africa. The number of confirmed infections worldwide has exceeded 33 million with over a million deaths—compared to the 7 million infections and 400,00 deaths as of June 2020. Countries expected to suffer the worst contractions include Spain (-12.8%), Italy (-10.6%), India (-10.3%), and Mexico (-9.3%).

The segments of the population most economically vulnerable to COVID-19 are women and young adults. This could be because society puts disproportionate pressure on women to care for children which may jeopardize their employment opportunities. For example, mothers who can’t afford daycare or a nanny might be forced to stay home due to school closures which could limit their employment to remote positions. Young people, meanwhile, have less stable income than their older counterparts and are generally more likely to be employed in labor-intensive jobs that would be terminated by COVID-19. They also are less likely to have access to saved financial resources such as a retirement fund in the scenario that they become unemployed.

Could lifting lockdowns cause the economy to recover? The IMF finds that to be extremely unlikely—research suggests that lockdowns and social distancing have a comparable negative impact on the economy. Prematurely lifting lockdowns will do more harm than good; the global recession will not end until the virus is gone.

The World Health Organization has stated that it doesn’t expect widespread vaccines against coronavirus until mid-2021, so what should be done before then? Policy interventions such as unemployment benefits and paid-parental leave must be undertaken by countries around the world in order to help vulnerable populations. This will help ensure that this crisis does not contribute to a widening gender and intergenerational economic inequality.

Now is not the time for politicians to be considering cutting social welfare programs and COVID-19 relief, we need to invest in our nation’s future by providing necessities for our most at-risk populations. In D.C. and around the world, governments need to take responsibility for those less fortunate, even if it means enduring a less than stellar economy in the short-term for a few more months.