#1 Economies are struggling with rising unemployment and the world is witnessing an increase in extreme poverty

Business closures and lockdowns have resulted in working-hour losses. According to the International labour Office (ILO), working- hour losses were equivalent to 255 million full-time jobs lost in 2020. Loss in working hours was four times that of the 2009 global financial crisis. As of January 2021, employment losses were highest in North and South America, and lowest in Europe and Central Asia.[1] Unemployment globally has led to a rise in extreme poverty. It is estimated that the pandemic has pushed around 115 million people into extreme poverty.

Figure 1: Working-hour losses into changes in unemployment, inactivity and reduced working hours, world and by income group and region, 2020

Source: ILO (2021)

Projections and Recovery Options

According to the International Monetary Fund ( IMF), projections indicate a loss of 90 million full-time jobs in 2021 compared to the 255 million in 2020, suggesting a slowdown in job destruction. However, the continued increase in job losses will drive more people below the poverty line. Around 82% of the total extreme poverty cases are expected to be in Middle-income countries. The occurrence of the COVID-19 pandemic along with existing pressures of conflict and climate change will make the goal of ending poverty by 2030 unlikely to be reached.[2] The ILO suggests four key pillars to recover from this employment shock, including simulating the economy and employment through the development of an active fiscal policy along with lending and financial support to specific sectors; supporting enterprises and incomes through employment retention measures; protecting workers in the workplace and relying on social dialogue for solutions by strengthening dialogue between governments, employers and workers for policy responses.[3]

#2 Global public debt soars to an all-time high

According to the IMF’s October 2020 World Economic Outlook, government measures to sustain the pandemic’s economic effects totalled USD 12 trillion, which represents 12% of global GDP. Government debt has been soaring throughout 2020 to sustain these measures. As per the IMF April 2021 update, European Union countries showed the largest gross debt of over 90% of GDP in 2020, an increase of 10% compared to 2019, and is expected to continue to be the highest till 2026. Moreover, global debt was at 98% of GDP at the end of 2020, compared to 84% for the same period in 2019.[4]

Figure 2: Government gross debt up to 2025

Note: Forecasts start from 2021
Source: IMF, World Economic Outlook, April 2021

Projections and Recovery Options

Rising debts are expected to drive up governments’ net interest payments. Government debt surges due to the pandemic are expected to loom well into 2026. Most economies are expected to maintain debt levels with negligible signs of debt recovery. On the other hand, the cost of borrowing has never been lower, making it manageable in most cases. Governments are resorting to a number of recovery options, with several countries introducing budgetary measures for 2021 to mitigate the effects of the pandemic, keeping in mind vaccine distributions. An increase in spending by governments, such as the increase in fiscal support for households and firms are facilitating the necessary structural transformation. As per the IMF, ‘Credible medium-term fiscal frameworks are needed now, especially where debt is high and financing conditions are tight or at risk’.[5] Moreover, reallocation of labour and capital and a public investment push will help reduce the spill lover effects of increasing debt.

#3 Localisation and diversification of global supply chains

Border closures and shipment delays as a result of the pandemic have disrupted the supply of goods and services to firms. Global trade has thus led to supply chains becoming more localised as a response to rising trade costs and increasing trade uncertainties. Economies are trying to boost local production to satisfy domestic demand, in turn ensuring fewer disruptions to the supply chain and limiting the movement of goods and people. For example, a survey in Southern Africa revealed that supply chain disruptions occurring between April and July 2020, resulted in a 58% shortage of supplies.[6] Firms were thus forced to look for local alternative suppliers, with 55% of survey respondents finding new local suppliers[7]. Manufacturers are also continuously diversifying sourcing by shifting focus to ‘closer-to-home’ partners (called ‘onshoring’) or other regional substitutes.

Figure 3: Supply shortages due to COVID-19 in Southern Africa: Survey Results

Source: IEC, UNECA (2020)

As a result of localisation and diversification of procurement, as well as dampening demand, global trade also experienced a contraction of over 8%.

Figure 4: Predicted change in Export and Import by 2022

Note: * are predictions
Source: IMF, World Economic Outlook, April 2021

Projections and Recovery Options

Erratic disruptions in the supply chain have also resulted in unexpected consumer behaviour, such as the replacement of brick-and-mortar sales by e-commerce. The post-pandemic supply chain will require customisation of product and service portfolios to serve customers online, also keeping in mind future profitability.[8] Localisation may witness a decline in trade. However, supply chains need to be more resilient with businesses response to the post-pandemic supply chain requiring: i) better estimations of the available inventory along the value chain; ii) optimising production and distribution capacities; iii) identifying where the risks lie and building strategies around it; and iv) diversifying the supply base to regional locations with high profitability.[9]  International Economics (IEC) has been involved in various projects analysing and studying supply chains in the COVID-19 period, including surveys at different periods of the pandemic looking at the impact of COVID-19 on African businesses and the outlook to COVID-19 in Southern Africa. IEC is also working with the World Bank and UN organisations in the Indian Ocean on recovery strategies, and is currently advising on recovery strategies for Indonesian and Uzbek businesses.

#4 Rise of digitalisation and e-commerce

Due to mobility restrictions, a majority of consumer interactions have shifted to online shopping.  Digitisation has bridged the gaps of social distancing measures with new digital tools and technologies. Remote work, adopting new platforms to deliver services, digital healthcare and digital content consumption has kept societies and businesses afloat during the pandemic. With shoppers staying home, traditional retail has seen unprecedented falls thus giving rise to online shopping. E-commerce revenues stood at USD 2.5 trillion globally in 2020, as compared to USD 1.9 trillion in 2019.

Figure 5: Global eCommerce revenue forecast in billion USD

Source: Statista Digital Market Outlook as of November 2020

Projections and Recovery Options

The pandemic has reshaped the way people live and work. The adoption of digital technologies is expected to accelerate in a post-pandemic world. Particularly, for developing and emerging economies the transformation to a completely digital economy could be a reality in the near future, much sooner than would have otherwise occurred. Wide-scale digital adoption for both businesses and individuals will outlast the pandemic. E-commerce is expected to increase by over 22% in 2021 compared to 2020, an increase of 10% from pre-COVID-19 expectations.

For economies to embark on digital transformation it is essential to invest in the required ICT infrastructure, improve and update the regulatory environment concerning cybersecurity, implement data protection measures, encourage inter-operability amongst actors involved in ICT and invest in skills and promote a digital society, amongst others. IEC along with IMC Worldwide explored for the ASEAN Business Advisory Council, the feasibility and potential impact of possible ASEAN Regional Digital Trade Connectivity via the creation of a private sector-led National Digital Trade Platform in each of the ASEAN Member States.[10] Additionally, IEC drew up the regional e-commerce blueprint for the Pacific islands and is currently engaged in crafting an e-payments blueprint for Africa, and an e-commerce strategy around the AfCFTA.

#5 Vaccines rollouts, and the growing role and prominence for developing countries

Amid the COVID-19 pandemic, vaccines were developed at a record speed. As of 5 April 2021, there were already 13 approved vaccines, 291 ongoing trials, and around 104 vaccine candidates.[11]

Figure 6: Map of development and distribution of vaccines

Source: WTO, 2020

Developing countries with strong manufacturing capacities, like India, China, and Russia have seized the uneven distribution of vaccines as an opportunity to bolster their global status, indirectly creating a geopolitical upper hand.[12] They are rolling out diplomacy campaigns and helping the many small nations who struggle with vaccine supplies. India has already sent over 361 million doses as donations to countries lacking vaccine resources such as Mauritius, Seychelles, Sri Lanka, Bahrain, Oman, and Afghanistan, amongst others.[13] China claims to be helping 53 countries, whilst Russia has already sent vaccine doses to 26 countries.[14] IEC’s CEO Insight from March gave a more detailed description of the COVID-19 vaccine supply chain and global distribution of vaccines.[15]

Projections and Recovery Options

According to The Economist, a country’s income level will prove to be the main determining factor of vaccine procurement.[16] High-income countries, which have taken at least 70% of the supply of vaccines are expected to achieve immunisation by the end of 2021, whereas middle-income countries are expected to have complete access to vaccines only by mid-2022. Africa, along with smaller developing economies will only have access to vaccines in 2023.[17]

Larger developing economies such as India and China, which have an edge due to their capacity to manufacture domestic vaccines and quick rollouts, will only be able to achieve immunisation by the end of 2022 due to their population sizes.[18] For most developing nations who lack resources for vaccine development or manufacturing, dependence on regional leaders for immunisation has become a reality. Thus, vaccines are being deployed based on existing alliances and diplomacy.

Paul Baker is the founder and CEO of International Economics Consulting Ltd., based in Mauritius. He is a consultant for various G20 governments and developing countries, an adviser on corporate global strategy to multinationals, and is a Visiting Professor at the College of Europe.


[1] ILO (2021). ILO Monitor: COVID-19 and the world of work. Seventh edition Updated estimates and analysis, International Labour Organisation. 25 January 2021. Available at:


[2] The World Bank (2020). COVID-19 to Add as Many as 150 Million Extreme Poor by 2021. 7 October 2020. Washington. Available at: https://www.worldbank.org/en/news/press-release/2020/10/07/covid-19-to-add-as-many-as-150-million-extreme-poor-by-2021

[3] ILO (2021). Ibid.

[4] IMF (2021). World Economic Outlook, Managing Divergent Recoveries, International Monetary Fund, April 2021.

[5] IMF (2021). ibid.

[6] ECA-IEC (2020). “Reactions and Outlook to Covid-19 in Southern Africa” Available at:


[7] ECA-IEC (2020) ibid

[8] J. Bergstrom, I. Stewart, P. Gallagher (2020). Looking beyond the horizon, Preparing today’s supply chains to thrive in uncertainty, Deloitte Insights. 11 December 2020. Available at: https://www2.deloitte.com/us/en/insights/focus/industry-4-0/supply-chain-future-post-pandemic.html

[9] K. Alicke, X. Azcue, E. Barriball (2020). Supply-chain recovery in coronavirus times—plan for now and the future. McKinsey and Company. March 2020. Available at:

https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Operations/Our%20Insights/Supply%20chain%20recovery%20in%20coronavirus%20times%20plan%20for%20now%20and%20the%20future/Supply-chain-recovery-in-coronavirus-times-plan-for-now-and-the-future.pdf ; J. Kilpatrick, L. Barter, C. Alexander (2020). COVID-19: Orchestrating the recovery of supply chains. Deloitte. Available at: https://www2.deloitte.com/global/en/pages/about-deloitte/articles/covid-19/covid-19–the-recovery-of-organizations-and-supply-chains.html

[10] Read more on the “Impact Assessment and Roadmap for ASEAN Regional Digital Trade Transformation” project here: https://www.tradeeconomics.com/iec_projects/impact-assessment-and-roadmap-for-asean-regional-digital-trade-transformation/

[11] McGill University (2021). COVID-19 vaccine tracker, McGill COVID19 Vaccine Tracker Team, Available at: https://covid19.trackvaccines.org

[12] D. Ellwood (2021). Vaccine Diplomacy: A New Chapter in The Story of Soft Power, CPD Blog. March 17, 2021. Available at: https://uscpublicdiplomacy.org/blog/vaccine-diplomacy-new-chapter-story-soft-power


[14] K. Cullinan, E. Nakkazi (2021). Russian And Chinese Bilateral Vaccine Deals & Donations Outmaneuver Europe & United States, Health Policy Watch. March 4, 2021. Available at: https://healthpolicy-watch.news/russia-and-chinas-bilateral-vaccine/

[15] IEC CEO Insights, March Issue “Vaccines bring hope of recovery but global distribution remains a challenge”, Can be found here: https://www.tradeeconomics.com/vaccines-bring-hope-of-recovery-but-global-distribution-remains-a-challenge/

[16] The Economist (2021). Vaccine nationalism means that poor countries will be left behind, Daily Chart. January 28, 2021. Available at: https://www.economist.com/graphic-detail/2021/01/28/vaccine-nationalism-means-that-poor-countries-will-be-left-behind

[17] https://www.telegraph.co.uk/global-health/science-and-disease/poorest-countries-will-not-have-widespread-access-vaccines-2023/

[18] The Economist (2021). More than 85 poor countries will not have widespread access to coronavirus vaccines before 2023. Retrieved from The Economist, Intelligence Unit. Available at: https://www.eiu.com/n/85-poor-countries-will-not-have-access-to-coronavirus-vaccines/