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Coronavirus: 'Devastating' economic blow could last a decade

Lily Canter
·2-min read
Photo: Getty
Credit: Getty.

World Bank president David Malpass has warned the COVID-19 pandemic could have a "devastating blow" on the world economy for the next decade.

Some 60 million people could be pushed into "extreme poverty" living on less than £1.55 ($1.90) per day.

The livelihood of billions of people around the globe will be affected, according to the bank chief.

Speaking to BBC Radio 4's The World This Weekend he said: "The combination of the pandemic itself, and the shutdowns, has meant billions of people whose livelihoods have been disrupted. That's concerning.

"Both the direct consequences, meaning lost income, but also then the health consequences, the social consequences, are really harsh."

And people living in poverty have suffered the most according to Malpass.

"We can see that with the stock market in the US being relatively high, and yet people in the poor countries being not only unemployed, but unable to get any work even in the informal sector. And that's going to have consequences for a decade."

The World Bank is calling on banks and pension funds to follow their lead by offering debt relief to poor countries.

READ MORE: Coronavirus: Savings gap leaves UK consumers more vulnerable

Malpass said he would also like lenders to make the terms of their loans clearer, so other investors are more confident about putting money into developing economies.

Targeted government support and measures to shore up the private sector are vital to rebuild economies and create jobs in manufacturing to replace permanently lost employment in sectors such as tourism, the World Bank argues.

Malpass also predicts that the global economy will be less interconnected in the future as supply chains are created closer to home .

But ultimately the "catastrophe" could be overcome, with an optimistic Malpass concluding that "human nature is strong, and innovation is real."