As the percentage of those living in poverty grows, household consumption declines, prompting concern over “the permanent loss of productive capacity,” in low-income developing countries (LIDC) says the IMF. Rising levels of poverty also threaten progress in health, education and gender equality, with implications for lifetime earnings and savings.
LIDCs experienced 5% growth just last year, and they even contributed a larger portion of COVID-19 financial support toward health compared to advanced or emerging economies. But they aren’t able to provide the same level of fiscal support as a public safety net or to stimulate economic activity.
More vulnerable countries may look to their international community for support, for example, in the provision of health supplies, supply chain protection and financial assistance, including debt payment deferrals. The virus is only the first challenge to overcome, says the IMF, as “the COVID-19 pandemic will be defeated only when it and its socioeconomic consequences are overcome everywhere.”