Impacts of Covid-19 on Inclusive Economic Growth in Middle-income Countries

This helpdesk report reviews available evidence on impacts from previous epidemics, financial crises and emerging evidence from Covid-19 on inclusive growth in middle-income countries. Covid-19 is likely to cause much greater economic damage than any recent disease outbreak or economic crisis. Covid-19’s economic impacts are broader and more severe than most past crises. Covid-19 has greatly disrupted global value chains, which now account for more than two-thirds of world trade and disruptions are likely to continue to propagate back and forth through these networks as countries restrict economic activity to control the disease. Agricultural production and prices have not yet been strongly affected by Covid-19, with the exception of crops grown for biofuels and industrial purposes and food security is not currently threatened at the global level. Countries, regions, and cities where service industries account for a large share of GDP are likely to be badly affected by Covid-19. Despite substantial progress on reducing global poverty in the past thirty years, there is a significant chance that Covid-19 could lead to 2020 being the first year with an increase in poverty levels since 1990. However, women and girls are particularly vulnerable to economic hardships.