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Italy’s current economic crisis

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The day of reckoning has now come for the Italian economic crisis, worsened by the Covid-19 pandemic and the related lockdown.

As the Italian Statistical Institute (ISTAT) showed, 34% of Italian production has been negatively affected. The activity and operations of 2.2 million companies, accounting for 49% of the total, have also been suspended, but 65% of the entire export business has been closed.

This means that Italy’s economic system is changing.

All this has stopped – hopefully temporarily – the work of 7.4 million employees (44.3% of the total number of private employees not directly working in offices) and, along with the fear of coronavirus, it has obviously had a snowball effect, which has soon greatly reduced the confidence rate of consumers and businesses.

Production has been stopped for 34.2% of companies and the same holds true for 27.1% of value added.

 Therefore, considering the general lockdown envisaged, the fall in jobs currently affects 385,000 workers, 46,000 of whom are irregular, to the tune of 9 billion euros of wages.

The most affected sectors have been catering and accommodation (-11.3%), logistics, transport and trade (-2.7%).

 With sectoral closures envisaged until June, the overall reduction in value added amounts to 4.5%.

 The employees affected by definitive closures will be 900,000 approximately, 103,000 of whom are irregular, for a total amount of 20.8 billion euros of lost wages.

That is where the complex and long-standing E.U. issue comes in.

If we consider all the possible and already proposed E.U. funds, we are talking about 100 billion euro of resources, while it is very likely that Italy may have a “firepower” to generate credits and funds up to 300 billion euros. It would need them all and probably they will not be enough.

We should also consider the future 172 billion euros from the Recovery Fund.

The Conte II government has so far mobilized – albeit with badly drafted, superficial and even naïve rules and regulations – about 75 billion euros of resources, all based on budget deficit.

The so-called Cura Italia decree of last March “mobilized” 25 billion euros and 55 billion euros were mobilized with the recovery Decree of last May.

Certainly not everyone has yet reached this money – sometimes not even many of them. The funding to companies -shambolic and all foolishly used through the banking system, which is structurally inefficient – reminds us of what a great Lombard entrepreneur used to say years ago: “What do we industrialists ask of the State? That it gets out of the way”.

 The European Funds from SURE, the European Investment Bank and the European Stability Mechanism will mobilize about 270 billion euros throughout the European Union, with a share for Italy equal to 96 billion euros.

They are certainly not enough to rebuild the production system and compensate for damage.

 SURE is currently worth around 20 billion euros for Italy alone, but only to finance the Redundancy Fund, while 40 billion euros will be the Italian share of the 200 billion funds provided by the EIB only for SMEs.

 Therefore, Italy will go into debt – albeit on favourable terms -but not to get what it really needs.

 The rest will certainly have to be borrowed on the financial markets and with our own public debt securities which, however, at maturity will be secondary to the ESM or EIB loans.

Another key problem is that if and when – but it will happen anyway- the standard rules of the Stability Pact are back in place, we will be left with a very high debt, but still liable to all the reprimands of both the “markets” and the E.U. which, at that juncture, may also revise the terms and conditions of the loans already in place.

 For Italy, the Recovery Fund could make available the above stated 172 billion euros, of which 90 billion of loans and 81 billion of grants.

At the end of 2020, however, the Italian public debt will rise by as many as 15 points of GDP.

Why? Firstly, because the denominator will obviously be lower: the economic downturn resulting from the coronavirus crisis will be much wider than the one occurred in 2008, with a very severe 5.3% decrease compared to the GDP recorded in 2008.

Currently Confindustria, the General Confederation of Italian Industry, estimates a 6% drop in Gross Domestic Product, while Goldman Sachs estimates a 11.6% fall.

 Obviously there is also the inevitable increase in public spending, which is another public debt problem, hoping that speculation will stay calm – which is unlikely. There will also be a sharp drop in tax revenue.

 For example, it is estimated that 20% of the professionals registered with professionals Rolls and Associations risks being forced out of the market. It is no small matter. Other associations in the sector provide similar data.

Hence, if we assume a 6% GDP reduction, the debt-to-GDP ratio would rise from the 135% of late 2019 to at least over 153% at the end of 2020.

 With an11% GDP fall, the debt-to-GDP ratio in late 2020 would be equal to 163%.

Obviously, in such a context, even pending the suspension of the Stability Pact, Italy’s debt would be very hard to support.

Here the problem also lies in primary surplus. According to our data, even if we assume a limited 2.5% GDP rebound in 2021, with an unchanged cost of debt (2.6% in this case) there would be the absolute need for primary surpluses of at least 2.3% and 2.6%, respectively, in the case being studied of a 9% fall in GDP and also in case of an 11% collapse.

 In other words, the government should cut public spending always below 40 billion euros compared to taxation. This is impossible.

Therefore, we must necessarily monetise the extra-deficit with the ECB -monetise and not postpone payment until maturity – but for a very long period of time and for amounts that will probably be much higher than the current ones. It will also be necessary to issue common E.U. debt securities.

 Otherwise the markets, which have already laughed at a currency that has not even a common taxation and a single public budget rule, will pounce on the poor wretched Euro and destroy it.

 Then there is the ECB. On June 4, 2020 it announced the expansion of the Pandemic Emergency Purchase Program (PEPP) from 750 to 1,350 billion euros and also its extension until June 2021 and, in any case, until the end of the emergency situation.

However, there is additional data to analyse. Firstly, the current PEPP share mobilized for each E.U. Member State in the March-May 2020 quarter still corresponds, in essence, to the capital key.

The capital key is the mechanism whereby the ECB purchases sovereign debt in proportion to each country’s ECB share. The key is calculated according to the size of a Member State in relation to the European Union as a whole. The size is measured by population and gross domestic product in equal parts. In this way, each national Central Bank has a fair share in the ECB’s total capital.

 With two significant exceptions for the time being: France in a negative senseand Italy in a positive sense.

In other words, France is actually supporting Italy’s public debt. Obviously it cannot last long.

Even in the Italian debt case, however, the PEPP share does not seem to be as high as usually believed.

 The maximum absorption has long been recorded by the TLTRO purchase programme. Indeed, these are short-term operations and the markets know they will end soon.

What next? There is no alternative option.

Let us not even talk about the possibility that, based on the pressure from the so-called “thrifty countries”, well led by Germany, this mechanism may stop all of a sudden.

There is also another factor that should be better studied in Italy, namely the ruling of the German Constitutional Court based in Karlsruhe.

As made it very clear by the German Constitutional Court, it concerns the ECB programme known as Public Sector Purchase Programme (PSPP).

Created in 2015, it is still operational. It is not yet known for how much longer, to the delight of speculators.

On points of law, the German Constitutional Court challenged the 2018 judgment of the European Court of Justice, in which the Luxembourg judges considered the ECB’s intervention unlawful, but rather deemed that the E.U. Court should only confine itself to the actions and deeds manifestly exceeding the limits set by the Treaties and the ECB Statute.

 Therefore, the issue at stake in the current Karlsruhe ruling concerns the principle of proportionality (Article 5 TEU).

Based on the principle of proportionality, in fact, the E.U. can take action in “shared competence areas” (which are listed in Article 4 of the Treaty on the Functioning of the European Union) only if and insofar as the objectives of the proposed action cannot be sufficiently achieved by the Member States, but can rather be better achieved at E.U. level.

Certainly the monetary policy strictly falls within the E.U. and ECB competence, but the ECB’s action has inevitable repercussions on economic policy, which is in any case a shared competence area.

Hence, as the Karlsruhe judges maintain, the issue lies in defining whether the ECB enjoys independence even in relation to the treaties establishing it or whether the ECB itself should in any case follow the principles of the E.U. system to which it belongs.

 In essence, it is a matter of keeping fiscal and monetary policy still separate, and this is scientifically difficult. The dream of every badly aged and old-fashioned monetarist.

In essence, however, the Karlsruhe ruling tells us that the Euro area is sub-optimal(as we already knew, since Robert Mundell’s model certainly does not apply to the E.U. and the Euro) and is in any case not representative.

We have already known it, too, and indeed for a long time.

 The Euro is now a handicap for most E.U. Member States except Germany.

 The system of fixed rates with the European currency enables Germany to be increasingly competitive on the export side, in the absence of mechanisms to readjust foreign trade balances.

 Moreover, there is not even a real and homogeneous tax policy in the E.U.Member States, not to mention the ban on funding the Member States’ debt, which was established as far as the Maastricht Treaty.

With a view to avoiding this ECB funding mechanism, which may be rational but is illegal under the E.U. Treaties, Germany basically asks us to sell the public debt securities purchased by the ECB before their maturity.

That is fine, but it only means that a Member State’s debt can never be cancelled by purchasing the securities through its Central Bank.

Hence the securities continue to exist and be painstakingly renewed or possibly continue to re-enter the market.

Facts are facts, however, and without Mario Draghi’s quantitative easing (QE), France, for example, could certainly not have 32% of its public debt been bought back by the Eurosystem.

 When all E.U.Member States’ securities reach maturity, other ones are always purchased, so that the exposure remains around 33% and Germany is happy with this strict compliance with the law.

This 33% limit is self-imposed by the ECB so as to avoid one of the Karlsruhe conditions, i.e. the national voting thresholds, within the ECB, for rescheduling the debt of an individual State.

 It should be noted, however, that the ECB funds the absorption of E.U. countries’ public debt with the creation of money ex nihilo, like all Central Banks in the world. Nevertheless,this is still explicitly prohibited by the Treaties, but is barely justified, at legal level, with the aim of curbing inflation.

 An economic ideology which is now very old-style, but still very fashionable within the European Central Bank.

The various ECB sovereign debt purchase programmes are already worth over 1,000 billion euros, accounting for 8% of the entire Euro area.

However, with a view to really operating in this area, the ECB must also get rid of the German Constitutional Court’s first ruling of 2017, namely the 33% limit and hence the obligation to put the purchased securities back into circulation immediately after the end of the pandemic.

Reselling, on the secondary market, the securities still maturing would cancel all the monetisation benefits, but a new PEPP will be needed in the future, without quantitative limits and for a long period of time.

 And the ruling of the German Constitutional Court and Germany itself, with or without “Nordic” or “thrifty” watchdogs, will certainly get in the way. Hence for Italy (and France) there will not be much room for manoeuvre.

 The Fourth Reich is advancing not with the overheated “Tiger” tanks or with the Pervitinephedrine drugs, but with the monetary game on a non-rational currency.

Germany, however, said a very clear “no” to this process of debt repurchase and absorption, precisely with the Karlsruhe ruling of May 5.

The current PEPP is already outlawed under German law. We need to remember it or Germany will make us remember it.

 Italy, however, will not survive within the Euro area without QE, PEPP or any other trickery may be devised by the European Central Bank. The same holds true for France, although it still does not say so clearly.

 When, at the end of the three months allowed by the ruling of the German Constitutional Court, the Bundesbank withdraws from the purchase operations, it will obviously start again to put several thousand Bunds purchased with the ECB back on the market.

The sales of these securities will make rates rise in Germany, an increase that will be counteracted by the flight of Italian and French capital to buy German debt.

 At that juncture, Germany itself will autonomously carry out controls on capital, which is tantamount to paving the way for its exit from the Euro.

 What about the United States? At the end of 2019, before the lockdown, the share of speculative debt at high default risk amounted to 5,200 billion U.S. dollars.

Over the last two months of Covid-19 crisis, 1,600 companies a day have gone bankrupt in the United States, while consumer debt – a sort of crazy magic wand for American spending – has decreased by at least 2 billion U.S. dollars per month.

It is a severe drop for those who foolishly live on debt, not to mention that in late 2019 consumption was worth 75% of the U.S. GDP.

Therefore, considering the close correlation existing between consumer credit and consumption – and hence GDP – in the United States, there will almost certainly be a further crisis in companies’ solvency there.

 Since 2008 FED’s interventions have been worth 7,000 billion U.S. dollars, and the financial assets on the U.S. market are worth approximately 120 trillion dollars, i.e. 5.5 times the North American GDP.

Hence, not even the United States will give us a chance to find a way out or an exit strategy.

Advisory Board Co-chair Honoris Causa Professor Giancarlo Elia Valori is an eminent Italian economist and businessman. He holds prestigious academic distinctions and national orders. Mr. Valori has lectured on international affairs and economics at the world’s leading universities such as Peking University, the Hebrew University of Jerusalem and the Yeshiva University in New York. He currently chairs “International World Group”, he is also the honorary president of Huawei Italy, economic adviser to the Chinese giant HNA Group. In 1992 he was appointed Officier de la Légion d’Honneur de la République Francaise, with this motivation: “A man who can see across borders to understand the world” and in 2002 he received the title “Honorable” of the Académie des Sciences de l’Institut de France. “

Economy

An Uneven Recovery: the Impact of COVID-19 on Latin America and the Caribbean

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Employment rates in some Latin American and Caribbean countries have experienced a relative recovery, although in most, rates fall short of pre-pandemic levels. The quality of available jobs has also declined, as has the number of hours of paid work per week, according to data from a new survey by the World Bank and the United Nations Development Program (UNDP).

The High-frequency Phone Surveys, the second phase of which was implemented this year in 24 countries of the region, provides a snapshot of families’ well-being and their perceptions regarding the crisis. The goal is to take the pulse of the region and measure the impacts of the pandemic in key areas such as the labor market, income and food security, gender equality, and household access to basic services, such as education, health (including the COVID-19 vaccine), Internet connectivity and digital finance. The survey took a representative sample of the population aged 18 and over with access to a telephone in each country.

“The COVID-19 pandemic underscored the pre-existing inequalities in the region, where the most vulnerable and poorest groups have been disproportionately affected,” said Luis Felipe López-Calva, UNDP Regional Director for Latin America and the Caribbean. “This survey allows us to take the pulse of the region and propose evidence-based solutions.”

“The pandemic severely impacted millions of families in the region,” said Carlos Felipe Jaramillo, World Bank Vice-president for Latin America and the Caribbean. “These surveys we present today are crucial for obtaining current data on the scope of the crisis and for recommending informed measures to help improve the quality of life in our countries.”

Survey results demonstrate that the crisis particularly affected women, both because of the stronger initial impact on them and their slower labor market recovery. Mothers of young children (aged 0 to 5 years) have been most affected. In fact, a year and a half after the onset of the crisis, women are twice as likely as men to be unemployed owing to the pandemic. This situation is exacerbated by an increase in women’s household responsibilities, including supervision of children in remote education, and a higher incidence of mental health problems.

For the region as a whole, the employment rate stood at around 62 percent, almost 11 percentage points below the pre-pandemic level. Employment rates surpassed pre-crisis levels only in Guatemala, Nicaragua and El Salvador.

Moreover, formal employment fell 5.3 percent in the region while self-employment grew 5.7 percent, and the proportion of workers employed in small businesses (maximum of four workers) increased by 8 percent. These figures point to a deterioration in the quality of available employment. Even among the employed population, regional survey results identified a decrease in weekly hours of paid work, from 43 to 37, confirming this negative trend.

The survey data found that 28 percent of people employed before the pandemic lost their jobs, and more than half (17 percent) of those with a job before the pandemic have left the labor force. These impacts disproportionately affected women with young children: 40 percent of female workers over 18 with children aged 0 to 5 years lost their pre-pandemic job, compared to 39 percent of women in general and 18 percent of men.

The pandemic had a greater impact on less educated workers (both men and women). Thirty-five percent of those with a primary education or less lost their job during the pandemic, as did 28 percent of employees with a secondary education. Approximately 19 percent of individuals with a tertiary education became unemployed.

Survey data revealed that as a consequence of labor market setbacks, just over half of the households in the region have not yet managed to recover their pre-pandemic income levels. This situation occurred despite government efforts to help families through direct transfer programs and other benefits. Approximately 38 percent of survey respondents had received emergency cash transfers.

The survey demonstrated that food insecurity still affects 23.9 percent of households in Latin America and the Caribbean. This figure is almost double that reported by households prior to the pandemic — 12.8 percent. However, most countries have improved in this area with respect to the levels observed in June 2020.

Results also demonstrated that more than a year after the onset of the crisis, 86 percent of school-age children and youth receive some type of education (face-to-face or remote). However, figures vary widely across countries: in Guyana and Guatemala, it is 64 percent while in Peru and Chile, it reaches 95 and 97 percent, respectively. Additionally, education coverage falls below pre-pandemic levels in the countries surveyed. Just under a quarter of students in the region attended face-to-face classes.

Access to health services improved significantly. However, the percentage of unvaccinated people remains high in some countries. Eight percent of the regional population has not been vaccinated or is not willing to receive a vaccine. This percentage is especially high in the Caribbean: 60 percent in Haiti, 49 percent in Jamaica and 43 percent in Saint Lucia and Dominica.

Finally, according to the survey results, the use of mobile banking and online transactions (e-commerce) rose sharply during the pandemic. The use of digital payments also increased — currently, 26 percent of survey respondents said they used mobile wallets. The highest increases were among the rural population, the population over age 55 and those with low levels of education (primary or less).

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Economy

Gender-based violence in Bangladesh: Economic Implications

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Violence against women is one of the most heinous crimes perpetrated in today’s   world. However, despite the gravity of the violence perpetrated against women, it is still the pervading reality in the world. Bangladesh is also afflicted with this malaise of violence against women which is manifested in the deluge of news across the media about the violence against women in various  form .While Bangladesh has made commendable strides in the economic front, the  perennial subjugation of the women who account  for virtually half of its population remains a hurdle. Against this backdrop, this article investigates the economic toll incurred to the economy owing to the entrenched culture of systemic violence in our country.

Women constitute nearly half of the population of Bangladesh. As such, their innate potentials have considerable bearing on the socio-economic progress of the country. Admittedly, advancement of a country in socio-cultural indicators presupposes the simultaneous improvement of  women from the subjugated position culturally attributed to them. It is impossible  to envisage a prosperous thriving economy without the contribution and participation of the women equally. Therefore, the lack of women’s participation commensurate with their capabilities   hinders the development of the country.

One of the obstacles women confront in their journey of transforming into human capital is perhaps the retrograde views that society harbor about the traditional gender role of the women which fetter their contribution to the economy and society by bestowing them only  the  circumscribed role of  looking after the domestic affairs and rearing and educating child. The pastoral as well as urban culture   perpetuate these traditional gender roles and deny women a free rein over their fate. Whenever  women   disavow the preordained and predictable roles  provided by the society, they  have  to face mounting pressure from society so as to conform to the prevailing norms .Failing to  conform to the  regressive gender role will spell grave consequences for the women .When the society fails to cower the woman with the threats that are at its disposal ,it resort to the egregious path of violence. While   violence against women is one of the most reprehensible crime one can ever commit, it however is normalized through a power dynamics that  reinforces the overbearing male role and relegate women to the subjugation. Therefore, the culture of violence against women isn’t anomalous rather is embedded in the prevailing  patriarchal power dynamics which deem chastising women for their  rebellious attitude is solicited and  invoke often contrived and distorted religious edicts in order to legitimize their deplorable crime. Moreover, the culture of violence against women which has been  aptly termed as a epidemic by the United Nations  is rooted in the prevailing socio-economic  structure of the country that  systematically condone the browbeating of women into submission to patriarchal  norms and wield violent measures when the woman stubbornly gainsay their patriarchal hegemony.

While the social, cultural and health toll of the violence perpetrated against women is undoubtedly strenuous, the economic losses incurred by the violence and the opportunities nipped in the bud owing to violence against women also need to be taken into account in order to the adequately discern the deleterious ramifications of the violence against women .However, despite profound economic toll that are inflicted due to the violence against women, it is still unaddressed in the economic literature worldwide and discussion and cognizance about this momentous issue and its economic implications still scant.

As has been mentioned earlier, women constitute the lynchpin of the economy of Bangladesh which has been adequately manifested in the participation of women in Bangladesh’s much-heralded RMG sector and other productive sectors. However, this success of the economy   overshadows the plight and perils  this working class women confront in their bid to become economically productive. The violence against women is systemically entrenched in the country and women’s engagement in the economic activities are frowned upon by the society and culture .Therefore ,the this patriarchal fetter women behind the door of their  houses  and worst women are inflicted  physical and mental violence in event of questioning the dictates of the elders and the male custodians. Therefore , the fundamental impact of violence against women on the economy of the country related to the untapped opportunities due to the constrains imposed by the patriarchal society on women under the pretext of social, religious and cultural norm. This threat alone or normalization of the gender role of the women as a care-giver hinder women in taking part in the economy on a par with their male counterparts  .

Beside the lost  opportunities that can be tapped, the violence against women has numerous other implications on the economy. Firstly, the violence against women inevitably  results in the physical damage and mental trauma of the victim which has enduring toll on her. Therefore ,violence against women translate to toll on the health of the victim and therefore the cost incurred on the victim due to medical fees  as a result of the violence is also included in the economic cost of violence against women. Secondly, the violence against women also leads to diminished productivity of the victim due to the health hazards. Therefore, violence against women has implicit economic cost on the economy as a result of the lost productivity.

Thirdly,the cycle of the violence against women negatively sensitize women in not challenging the sacrosanct patriarchal norms and therefore women fit themselves with the prevailing adverse society and they themselves reproduce and reinforce these norms .Therefore, a vicious cycle set in which prevents women to actualize their potential and stymie them in their path of realizing their goal .This result a sense of apathy in women with regards to education and other means of social mobility and they deliberately avoid the economically productive activities that are deemed taboo by the prevailing social norms and cultural ethos.

Moreover, violence against women is an egregious form of crime perpetrated by a   patriarchal agent while the society has entrenched roles, norms and ethos that condone and encourage such outrageous violence .Moreover, a vicious cycle is at play in the gender based violence. The economic repercussions of the violence committed against women is considerable. Violence against women hinder the development  of the women commensurate with their inherent potential which nip the dreams of women in the bud. Besides, gender based violence also deter women in challenging the prevailing patriarchal norms and undertaking productive economic activities that are frowned by the patriarchal society and are deemed taboo. Moreover, a widespread sensitization in societal level as well as a drastic  overhaul of the patriarchal structure is necessary in order to avert the adverse socio-economic consequences of gender-based violence and extirpate the heinous root of this deplorable crime.

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Economy

Omicron Variant: Implications on Global Economy

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The prolonged battering of the Covid-19 has been considerably hitting the world economy. While vaccination and a receding in the cases of the cases in virus transmission has provided   brief respite to   the countries that are grappling with the recurring surge of the virus, the resurfacing of another virulent   mutation termed as  Omicron sounds ominous for the future of the world economy .Against this backdrop, this article projects the plausible economic ramifications of the new strand of the virus on the global economy.

The economic downward trajectory occasioned by the Covid-19 has been unprecedented in recent global history. While the economic depression of 2007-08 proved disastrous for the world economy, the toll   emanating from Covid-19 pandemic and consequent   economic stagnation has surpassed all the previous   economic plunge .In fact, some analysts have gone to the extent of   comparing the Covid-19 induced economic depression with the great depression of the 1920s.However, whether the far reaching repercussions of the Covid-19 on the global economy will be as momentous is still remains to be seen. Nevertheless, the   profound   economic jolt triggered by the Covid-19 pandemic is poised to reverberate across the world through shaping socio-economic and political events

The scar inflicted by a protracted economic recession owing to Covid-19 is apparent in the arduous path of economic rejuvenation in the western countries and eastern countries alike. Virtually every country is grappling with the toll that Covid-19 has incurred in the economy. The western countries are finding it   difficult to retrieve the losses that Covid-19 has precipitated. Although the swift vaccination of the western countries at the expense of the developing countries has provided a fleeting lull in their battle against Covid-19,it seem however the virus has resurfaced with increasing virulence in order to offset whatever gain these embattled countries managed to garner in their fight against Covid-19.

The skyrocketing and unprecedented inflation of the western countries coupled with a plummeted consumer confidence has meant a prolonged period of stagnation of their economies. However, in the wake of vaccination induced temporary respite in the viral cases, the economies rebounded strongly from the pits of economic recession. However, these hard-earned   gains will be reversed in the event of the advent of any new strand of the virus. Already, the delta variant which originated in India had triggered a spate of Covid-19 flare-ups in the United   States and United Kingdom. Against this backdrop, the Omicron variant is set to aggravate the   economic woes of the western countries and in turn the world.

While the western countries are reeling from economic stagnation, the developing and underdeveloped countries are confronting many abysmal realities due to their prevailing economic backwardness. Their economic plight has been lingering in want of adequate vaccination due to the apathetic stance of the western countries and global governance institutions .Therefore, while the western countries has rebounded from the Covid-19 induces economic predicaments, the difficulties confronted by the developing countries has continued unabated. While the influence of advanced countries and their less advanced counterparts in world-economy is inextricably tied, the callous attitude of the developed countries to the vaccination of countries in Asia and South Asia turn out to   be sheer lack of economic prudence.

While western countries are considered as the economic hub of the world, it is however the developing countries on which the vital supply chains of the world economy hinges on. Therefore, the tardy pace of vaccination in these countries is prejudicial to the global economic stability. The economic ramification of the slow pace of vaccination is twofold for the world economy. Firstly, the slow vaccination hinders the revival of the economic activities in the developing countries thereby obstructing the supply chain of the commodities .This supply chain crisis has ripple effect in the western economies. The recent predicament of inflation and attending macroeconomic woes in countries like the United States and United Kingdom is manifestation of the supply chain crisis plaguing the world economy. Due to the paucity of commodities and raw materials, the prices of necessary goods has escalated in the western countries which has plummeted consumer confidence and triggered a vicious cycle of stagflation in the economy that is reminiscent of the 1970s when a similar crisis in oil supply has  precipitated economic downturn in the western economies.

Secondly, the slow rate of vaccination also run the risk of allowing the virus to mutating to newer and much virulent variants and due to the unfettered communication as a result of globalization the emergence of any new variant doesn’t remain in the confines of any border rather proliferate like wildfire and precipitate global crisis. Therefore, the lack of vaccination or slack pace therefore has global repercussions. Therefore, it is judicious of the developed countries to concentrate efforts in contributing to the vaccination of the less developed countries which will yield good results for their economy.

The ubiquitous mechanism in battling Covid-19 remains one of containment that entails halting economic and other activities and insulating the countries from other countries through imposing border controls, curbs on air communication and other stringent measures echoing protectionist attitude. However, these measures are antithetical to the spirit of the globalization and global trade. While lockdowns and other protectionist measures yield temporary improvement in the Covid  cases, it is not viable in the longer term. Besides, lockdowns have deleterious ramifications on the economy and further aggravate economic rebounding of the developed countries and developing countries alike. Therefore, efforts should be aimed at preventing the Covid cases rather than grappling with the Covid with a knee-jerk policy of improvisation. .

Moreover,Covid-19 has already occasioned far-reaching economic fallout in the world economy. Indications abound regarding the fact that the world economy is verging on profound and prolonged recession. Against the backdrop of ominous predictions and slackening growth and painful inflation of the world economy, the prospects of the world economy due the advent of a new variant remain mired in obscurity. It can be concluded that the economic repercussions of yet another novel variant will be momentous and will offset hard-earned growth of the countries .Unlike previous precedent of haphazard policy and knee-jerk policy solutions, this time around the countries need to undertake challenge much prudently and should concentrate all of their efforts aiming at universal vaccination of all countries so as to prevent the resurfacing of similar virulent viral strands.

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