Poor Countries Most Vulnerable During Global Economic Crisis

31 Mar 2009

New York, 31 March 2009: The current global economic crisis, which began with the severe strains on the financial and banking system in parts of the developed world, now risks triggering a human development catastrophe in the world’s poorest countries. As the leaders of the richest nations set off to London for the G-20 summit this Thursday, the United Nations Development Programme (UNDP) warns that those most vulnerable to the crisis are living outside the spotlight and their predicament should be addressed at the table.

"This crisis is not exclusive to Europe or America. It is everywhere and the G-20 countries should recognize that we are all in it together,” said Ad Melkert, UNDP Associate Administrator. “They should recognize the human development calamity facing the people of the poorest countries and commit the resources to bail them out."

Analyses of past recessions reveal that poor countries suffer substantially more than their richer counterparts, not just in terms of job and income loss, but in health and education indicators – life expectancy, school enrollment and completion rates all drop. In low-income countries, women, children and the poorest segments of society, are the most susceptible to the consequences of economic collapse. Data gathered during previous economic downturns indicates that even among poor children, girls are more likely to be pulled out of school than boys.

As remittances slump, trade collapses and commodity prices continue to be highly volatile, more families are falling into extreme poverty. Increases in poverty rates, almost mechanically, translate into increased mortality. For instance, a three percent decrease in Gross Domestic Product for developing countries may be associated with between 47 and 120 more infant deaths per 1000 live births. Already in some of the developing countries, the probability of a poor child dying is almost four times higher than a wealthier child in that same country and during economic downturns, the increase in infant mortality is five times higher for girls than for boys.

"This crisis is really a matter of life or death for many people in the poorest countries and it may take years to get back to the same level of economic growth, school enrollment and mortality rates,” said Mr. Melkert. “While the economic recovery may start in 2010, the damage to human development will be severe and social recovery may take several more years. Its impacts may still be visible in 2020, as past crises have taught us." At the G-20 summit, the UN Secretary-General, Ban Ki-moon, will in particular speak for the 150 developing countries not present around the table, pointing to the human development crisis, warning that unless urgent and decisive action is taken to protect the most vulnerable, the economic crisis may soon be compounded by political instability and global insecurity. Many of the unemployed will be young, living in countries that have no social safety nets to protect them. This is a potentially very dangerous fuse.

Developing countries do not have the same financial resources at their disposal that the rich countries possess. They also do not have the strong social security arrangements that exist in the developed world. Their ability to manoeuvre their way out of the crisis is rapidly shrinking. UNDP is currently working with governments to monitor the situation and help mitigate the crisis, design social protection measures, keep health and education services intact, generate employment programmes and develop food security initiatives. Read more...