The world is experiencing the worstpandemic crisis in one hundred years. By mid-April 2020,more than 80 percent of countries around the world hadimposed strict containment and mitigation measures tocontrol the spread of the disease. The economic fallout hasbeen immense, with dire consequences for poverty andwelfare, particularly in developing countries. This Brieffirst documents the global economic contraction and itspotential impact on developing countries regardingmacroeconomic performance, poverty rates, and incomes of thepoor and vulnerable. It then argues that the pandemic crisismay hurt low- and middle-income countries disproportionatelybecause most of them lack the resources and capacity to dealwith a systemic shock of this nature. Their large informalsectors, limited fiscal space, and poor governance makedeveloping countries particularly vulnerable to the pandemicand the measures to contain it. Next, the Brief reviewsrecent epidemiological and macroeconomic modelling andevidence on the costs and benefits of different mitigationand suppression strategies. It explores how thesecost-benefit considerations vary across countries atdifferent income levels. The Brief argues that, having morelimited resources and capabilities but also youngerpopulations, developing countries face different trade-offsin their fight against COVID-19 (coronavirus)than advancedcountries do. For developing countries, the trade-off is notjust between lives and the economy; rather, the challenge ispreserving lives and avoiding crushed livelihoods. Differenttrade-offs call for context-specific strategies. Forcountries with older populations and higher incomes, moreradical suppression measures may be optimal; while forpoorer, younger countries, more moderate measures may bebest. Having different trade-offs, however, provides nogrounds for complacency for developing countries. The Briefconcludes that the goal of saving lives and livelihoods ispossible with economic and public health policies tailoredto the reality of developing countries. Since"smart" mitigation strategies (such as shieldingthe vulnerable and identifying and isolating the infected)pose substantial challenges for implementation, acombination of ingenuity for adaptation, renewed effort bynational authorities, and support of the internationalcommunity is needed. The lockdowns may be easing, but thefight against the pandemic has not been won yet. People andeconomies will remain vulnerable until a vaccine ortreatment are developed. The challenge in the next fewmonths will be to revive the economy while mitigating newwaves of infection.
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