Information and news about economic crisis

COVID-19 in Thailand
COVID-19 and the economic consequences of its spread have caused greater levels of poverty in Thailand since 2020. Reports determined that the COVID-19 pandemic plunged almost 800,000 people into poverty in 2020. The impact of COVID-19 on poverty in Thailand has primarily manifested as a spike in unemployment. By spring of 2021, Thailand’s job market had 710,000 fewer jobs compared to the previous year. The pandemic also adversely affected tourism flow to the nation, which accounts for about a fifth of GDP and 20% of employment. Thailand’s economy and poverty levels have not experienced such a negative impact since the Asian Financial Crisis of 1997.

Government Initiatives to Mitigate Poverty

The government’s initiative, however, in responding to this crisis has somewhat curbed the pandemic’s potential for further devastation. Authorities were quick to introduce quarantine measures that were effective in containing the virus during most of 2020. Though several waves of infections have exacerbated the impact of COVID-19 on poverty in Thailand, the policy packages were effective in creating fiscal stimulus.

The support ranged from financial assistance for debtors to health-related spending for affected households, including those outside the social security system. Simulations suggest that more than 780,000 additional people could have fallen into poverty in 2020 if the government had not bolstered social support.

Thailand’s Continued Alleviation of Poverty

Thailand’s efficient response to the pandemic is impressive, but not surprising. Since 1988, the country has reduced its poverty levels from 65.2% to 6.2% in 2019, according to the World Bank. Its most effective initiative was to scale up cash transfer programs such that it became one of the largest scale fiscal responses to COVID-19 in the world.

“The crisis in 2020 demonstrated Thailand’s ability to leverage its robust and universal digital ID, sophisticated and interoperable digital platform and a number of administrative databases to filter eligibility for new cash transfer programs,” said Francesca Lamanna, the Senior Economist at the World Bank.

The Current Status of Poverty Levels in Thailand

While the government has responded relatively well, the country continues to struggle as it enters the fourth wave of COVID-19. The official unemployment rate was 2% in the first quarter of 2021 due to COVID-19, with the loss of jobs most concentrated in the services sector. On the one hand, slow vaccination rollout and widespread doubt seem to be stalling recovery. On the other, some infected individuals living below the poverty line may go so far as to violate quarantine rules in order to continue earning much-needed income.

The impact of COVID-19 on poverty in Thailand and its economic dependence on contact-intensive sectors means the continuing waves of infection prolong unemployment, with financially vulnerable groups bearing a disproportionate burden of economic insecurity.

Volunteer Workers Spearhead Poverty Aid Missions

In response to these conditions, the number of volunteers in Thailand has also been surging. Bangkok Community Help is one such organization. It has grown to more than 400 participants since its founding early in the pandemic in 2020. Greg Lange and Friso Poldervaart are two restaurant owners that spearheaded the community initiative after neighbors approached them to inquire if they could use their empty restaurant kitchens to prepare hot meals.

While the scale has transformed considerably, Bangkok Community Help’s main objective remains to assist vulnerable sections of Bangkok through volunteer and donation initiatives. “After [last April and May], we decided to focus more on more long-term projects, like building houses for people, turning a garbage dump into a park, and teaching kids,” Lange and Poldervaart told TimeOut.

Donations vary in scale and source. Individuals may hand out meals they prepared themselves to hungry construction workers, while foreign aid initiatives fund larger-scale operations such as survival packages of preserved goods. Australian Aid paid for rice recently distributed outside of Bangkok’s main port facilities through the Australian Government Aid Program. The program provides small grants in support of local, non-governmental organizations in Thailand.

The New Zealand – Thai Chamber of Commerce, an organization dedicated to promoting commerce between Thailand and New Zealand, donated apples. These organizations have even employed volunteers to bring oxygen tanks to the homes of the infected when hospitals were overcrowded, in the hopes of keeping them alive until a hospital bed becomes available. Bangkok Community Help continues to inspire individual and government action through its aid, opening aid centers and converting unused schools and auditoriums into treatment centers.

Future Possibilities

Looking towards the future of COVID-19’s impact on poverty in Thailand, there are different projections. The devastation of the pandemic is a large-scale issue that called for radical measures, but the methods of mitigation employed may be useful in shifting political focus towards strengthening social support systems in the future. These circumstances have the potential to catalyze an economic reform in Thailand, such that its industries can become more digital.

According to the International Monetary Fund (IMF), the authorities see this as an opportunity to transform tourism from low-cost, high-density travel, to high-end, low-density travel. This would allow for other domestic industries to flourish without wreaking havoc on the country’s economy. It may also be more ecologically friendly, offering greater protection of natural resources on which the tourism industry is dependent. All of these factors have the potential to gradually reduce the number of people living below the poverty line, by strengthening Thailand’s social and fiscal fiber.

– Arahi Fletcher
Photo: Unsplash

Argentina’s Informal Peso
Argentina’s informal peso, its ”dolar blue,” weakened drastically at the end of October 2021 and hit its all-time inflation high. The country’s risk rating increased by 19 points. The economic downturn arrived weeks before Argentina’s November 2021 elections, and economic improvement is long overdue.

What is the Dolar Blue?

The “Dolar Blue” is the unofficial rate of buying or selling physical United States dollars (USD) in an unofficial financial market in exchange for Argentine pesos. The transactions occur without the assistance of a banking institution or government oversight. Many transactions for Argentina’s informal peso occur right in storefronts or in the street.

In October 2021, the exchange rate hit 195 pesos per one USD. The exchange rate is typically greatly valued because this trade rate results in more pesos to the dollars for tourists and vice versa for those looking to use pesos.

In 2019, the Argentine peso lost value during an economic crisis due to suspending debt payments while the debt continues to climb for Argentina. The government had to act quickly to stabilize the peso. Since then, the Argentine government has slowly placed restrictions on the dolar blue to prevent any weakening of the formal peso.

What is a Country’s Risk Rating?

A risk rating is the measurement of the potential for non-payments on international loans that companies made to companies within the country being rated or to the countries themselves. It is the measurement to see how close a country is to defaulting on loans. Typically, the factors that lead to an increased risk rating are out of a countries’ control. However, the risk rating is the calculated risk that international businesses would undertake when dealing with the measured country. The higher the number, the greater the chances of business deals collapsing.

As Reuters reported, the risk rating for Argentina expanded 19 points when Argentina’s informal peso reached its all-time high of 1,672. It is essentially Argentina’s credit rating, but the higher the number, the lower the chance for foreign investment opportunities. This new risk rating could lead international companies or loan businesses to avoid working in Argentina or setting up loans there.

Without additional investment, the job market could have few opportunities to develop new jobs. There is little chance that unemployment rates could decrease.

Why Did this Economic Crash Happen and What Does this Mean for Argentina?

The two main factors causing the current economic crash are the country’s upcoming elections and growing inflation. The majority of surveyed Argentineans’ stated that their largest concern was the economy. Argentina has a history of economic downturn during periods of change in political leadership and growing economic fears. Argentina’s informal peso and formal peso have fallen in the past during periods similar to what the nation is experiencing now.

The drop in Argentina’s informal peso means economic growth has stagnated once again. Financial experts predicted Argentina’s impending devaluation of its formal currency, which appears to have started with the devaluation of its informal peso. With the devalued informal peso, battling inflation rates, four out of 10 Argentines live in poverty and have few means of escape.

Argentineans in poverty are struggling with the prices of necessities and with inflation. This is impacting both formal and informal pesos and the outlook is dour, according to The New York Times. Argentina’s informal peso brought tourists and new businesses to the country to support local Argentine companies and operations. With a destabilized and devalued the informal peso, more Argentineans are at risk of losing income. The devaluation of Argentina’s informal peso and widening country risk signals a long way to go before returning to a stable economy.

Is the Outlook Truly Grim?

The outlook is not entirely dismal. As grim as things look for Argentina economically, there are ways forward with the devalued informal peso.

In September 2021, Argentina reported economic growth. The poverty rate decreased slightly, which came as a pleasant surprise to many. In the first half of 2021, the poverty rate decreased to 42% and shows signs of continuing to decrease. Many did not expect the growth, given the difficulties of the COVID-19 pandemic. However, the growth signals that there is a chance for improvement despite the downturn of the peso and the risk rating.

In the weeks following the elections, the economy is likely to stabilize again. After the 2019 election, while the pesos’ exchange rates were still higher than average, they stabilized briefly. However, the recovery was short-lived due to the COVID-19 pandemic. Since then, the economy has struggled to restabilize. In the days since the COVID-19 pandemic first impacted Argentina, the economy has been slowly stabilizing and working towards recovery.

 After the 2021 November elections, there is a good chance for economic recovery and stabilization. Argentina’s informal peso could recover and the risk rating could decrease. The economy could revitalize with new business and partnerships.

Support for Argentina

Argentina has faced economic issues for several years, but they are not alone and receive help from many organizations, including The Working World (TWW). Brendan Martin founded TWW after witnessing the result of the Argentinean economic difficulties. The efforts on the ground that individuals made to start businesses and launch democratically operated businesses boosted the economy, and TWW decided to continue supporting this trend.

TWW works by partnering with businesses interested in furthering their workers’ rights to make decision-making processes more equitable. The organization designs loan packages to give the loans to pre-set projects that are in the hands of workers and repayment requires minimal interest.

TWW is a registered nonprofit organization in both the United States and Argentina. It understands the various currencies in Argentina, the exchange rates and the impacts both have on the Argentine economy.

Around the time TWW formed in Argentina and began democratizing businesses and stabilizing the workforce, the informal and formal peso stabilized in the exchange rates. Since then, TWW has expanded operations to more countries to transplant these business models and provide job security in countries. One example is Nicaragua or areas hit that hurricanes hit in the U.S. while maintaining some operations in Argentina.

TWW’s work has been invaluable in stabilizing the economy and workforce. The economic difficulties that inflation and political instability caused are manageable, largely because of nongovernmental organizations like The Working World.

– Clara Mulvihill
Photo: Unsplash

Saving Lives and the Economy in Timor-Leste
Timor-Leste, a small island nation previously known as East Timor, is inarguably enduring a very difficult and trying year. The combination of devastating floods after Cyclone Seroja in 2021 and the COVID-19 pandemic has left the nation desperately in need of assistance. Due to these disasters, the nation’s economy is currently struggling to find its way back to stability. Fortunately, on September 13, 2021, USAID announced plans to contribute an additional $1 million toward COVID-19 relief in Timor. This generous contribution will aid the goal of saving lives and the economy in Timor-Leste.

COVID-19 in Timor-Leste

Like any other nation, Timor-Leste has felt the inescapable effects of COVID-19. With a population of 1.3 million, the nation has witnessed 19,445 cases and 114 deaths as of September 28, 2021. Despite these numbers, as of September 28, 2021, Timor-Leste’s full vaccination rate stands at only about 20% of the population. This leaves an astounding number of people still unprotected.

The combination of flooding and COVID-19 has been catastrophic for Timor-Leste’s economy. In 2020, the nation’s economy endured a decline of 7%. Lockdowns and other restrictions amid COVID-19 led to significantly lower economic activity. While imports saw a reduction of approximately 19% “due to a slowdown in construction and travel services,” exports suffered even more, essentially declining by almost 50% “owing to limited travel services and lower coffee earnings.”

Because COVID-19 is a significant threat to the economy in Timor-Leste, increasing the country’s overall vaccination rate is crucial. Ending lockdowns and restoring normalcy will allow economic activity to return to pre-pandemic levels. Due to these harsh impacts, COVID-19 relief from organizations such as USAID is necessary for saving lives and the economy in Timor-Leste.

Assistance From USAID

USAID is a U.S. agency with a dedication to providing assistance during times of disaster at an international level. It works to eliminate poverty on a global scale, “strengthen democratic governance and help people emerge from humanitarian crises and progress beyond assistance.”

Along with an existing amount of $1.6 million that USAID allocated for COVID-19 relief in Timor-Leste, USAID is now providing an additional $1 million in support of this cause. The amount of COVID-19 aid to Timor-Leste from the United States now totals $5 million.

This added funding will contribute to the expansion of vaccination programs by employing prominent organizations and “trusted leaders” to encourage Timorese citizens to receive vaccinations. These efforts specifically focus on underserved communities on the outskirts of Dili, the largest city in Timor-Leste.

Partnering with Timorese officials, USAID also intends to instruct healthcare employees within rural and agricultural communities on vaccine protocols such as proper storage and transportation manners. Furthermore, USAID aims for vaccine equity, ensuring equal opportunity for all citizens to receive the vaccine. Additionally, USAID will partner with the Ministry of Health in Timor-Leste to closely monitor COVID-19 statistics in order to determine the safest resolutions for the nation and its citizens in the future.

Moving Forward

With USAID’s generous $1 million to fight the ongoing COVID-19 pandemic, the future looks promising for Timor-Leste and its population despite facing a tumultuous year. Through the support of organizations such as USAID, hope exists for restoring normalcy in Timor-Leste.

Not only are expanded vaccination efforts helping save lives but these efforts are also restoring economic stability in the country. With continued international support, Timor-Leste can successfully rebuild and recover from the impacts of the COVID-19 pandemic.

– River Simpson
Photo: Flickr

COVID-19, Poverty and The Debt Service Suspension Initiative (DSSI)
In the wake of its continuing devastation, Covid-19 has left, among other things, recessions across the world’s poorest countries. These recessions threaten to push more than 100 million people below the $1.90-a-day threshold that defines extreme poverty. To prevent poverty exacerbation, G20 countries have been called on by the World Bank and the International Monetary Fund to establish the Debt Service Suspension Initiative (DSSI). The initiative is designed to redirect funds planned for debt liquidation towards battling the pandemic and helping the most vulnerable populations.

How Does It Work?

Established in April 2020, the DSSI allows the suspension of government-to-government debt payments for 73 eligible countries. Over 60% of these countries accepted the offer as of 2021. The International Development Association and the U.N.’s respective lists of least developed countries encompass all countries cleared for suspension, minus Angola. Qualification for deferment also requires an application for an arrangement with the IMF, along with a commitment to use unfettered money towards social, health, or economic spending designed to remedy the effects of Covid-19.

Including interest and amortization payments, the total sovereign debt servicing payments in 2020 was projected to reach nearly $14 billion. Less than $4 billion of that belongs to the Paris Club group, prompting calls for other creditors like China and Russia to take part. Additionally, the G20 received requests to include entities such as banks and investment funds in the initiative, but this call has yet to receive a favorable response. About $5.7 billion in payments were deferred in 2020, with an additional deferment of $7.3 billion planned for June 2021.

The Unturned Stones

Reservations have been voiced regarding the ability of the temporary cessation of bilateral debt payments to provide adequate relief for the countries concerned. All debt is not the sovereign debt that is accounted for in the DSSI, and the fiscal ability of the approved countries is largely insufficient to weather the inclemency of Covid-19, even with debt deferment. At the vanguard of the call to private-sector creditors to adopt the initiative is the Institute of International Finance (IIF), a global association concerned with the finance industry.

Estimations from the IIF show that participation by private-sector creditors would provide an extra $13 billion in deferment. This would offer significant potential relief from the $35.3 billion owed collectively by the countries eligible for the DSSI. However, the IIF has made its concerns clear, particularly concerning the DSSI’s lack of consideration for the unique situation of each debtor country and the doubt that this causes for private-sector creditors.

The overall narrow eligibility scope of the DSSI has also been called into question. Middle-income countries have over eight times the amount of collective external debt outstanding compared to DSSI eligible countries. With $422.9 billion in debt payments in 2020 alone, these countries also run the risk of being financially incapable of dealing with Covid-19. After foreign investors pulled approximately $100 billion from middle-income countries’ markets in stocks and bonds, capital outflows leveled. The IIF, perhaps because of this observation, projected that the countries in question will encounter difficulties in borrowing money. The IIF also made projections that indicated unparalleled fiscal deficits in 2020.

Possible Solutions

Currently, no mechanism is in place to ensure that deferred debt payments will be used accordingly. One proposal involves the creation of a central credit facility (CCF) at the World Bank. This organization, if allowed, would require countries requesting relief to deposit deferred interest payments to certify that the funds would be used to negate the effects of the pandemic. Although the CCF has gained academic support and press recognition, whether countries will adopt it is uncertain.

Corporate or individual bankruptcy for countries is not an option.  The IMF attempted but failed to establish a sovereign resolution regime with its Sovereign Debt Restructuring Mechanism (SDRM) proposal in 2002, ultimately because of conflicting opinions on how to structure its design. A notable implementation of a debt moratorium occurred in 1931 by Herbert Hoover, then President of the United States. His declaration was followed by a rush of countries defaulting. Although these countries recovered faster than countries that did not default, such countries were hard-pressed to find any foreign lending for more than 20 years after defaulting.

Forging A Way Forward

While COVID-19 inflicted disastrous financial difficulties on nations worldwide, initiatives like the DSSI work to counteract the damage. In April 2021, G20 government-to-government creditors extended the DSSI for the final time by six months, taking its activity through December 2021. Despite concerns about its implementation and consequences, the DSSI represents a positive attempt by creditors nationwide to help the most vulnerable in the wake of COVID-19.

– Mohamed Makalou
Photo: Unsplash

Impact of COVID-19 on Poverty in Iran
The impact of COVID-19 on poverty in Iran is severe. The pandemic accelerated the decline of Iran’s Gross Domestic Product (GDP) and the rise of unemployment. Despite the economic crisis, Tehran’s massive natural resources allow the country to effectively recover economically if the newly elected Ebrahim Raisi is willing to end the country’s decades-long hostility with the United States.

The US Sanctions and Economic Crisis Before COVID-19

Before analyzing the impact of COVID-19 on poverty in Iran, one needs to understand the context in which the pandemic took place. In May 2018, under President Trump, the U.S. withdrew from the Iran nuclear deal, formally known as the Joint Comprehensive Plan of Action (JCPOA). As a result of the U.S. withdrawal, a “maximum pressure” campaign that consisted of unilateral sanctions against the Middle Eastern country replaced the Obama-era Iran foreign policy.

The sanctions contributed significantly to the downfall of Iran’s economy. The country’s GDP went down by 11% and average living standards have reduced by 13%. The “maximum pressure” campaign also caused an inflation shock. The sanctions cut oil exports, which reduced the supply of foreign exchange and resulted in hyperinflation. For example, the sanctions were one of the main reasons for prices rising by 41% in 2019.

How COVID-19 Worsened Iran’s Economic Crisis

The pandemic has further accelerated the crisis of the already declining Iranian economy. The mismanagement of the COVID-19 outbreak resulted in Iran being one of the worst impacted countries in the world, with almost 94,603 deaths and more than four million overall cases. Considering how widespread the highly transmissible Delta variant is and the fact that only about 4% of the country’s 83 million citizens are fully vaccinated, the future seems even more pessimistic.

Observing the health effects of the pandemic, it is not surprising how severely COVID-19 damaged Iran’s economy. In 2020, an estimated three to four million Iranians were at risk of losing their jobs, with the potential of increasing the actual (not official) unemployment rate from 20% to more than 35%. The country’s GDP shrunk by 5% in 2020 and inflation nearly doubled from February 2020 to February 2021. The COVID-19 pandemic caused a decline in GDP and an increase in public spending led the government to take extensive debt and sell its assets on the stock market. As a result, the fiscal deficit-to-GDP ratio more than doubled.

The Lives of Impoverished Iranians During the Pandemic

COVID-19 forced working-class, low-income Iranians to choose between their health and earning a basic income necessary for physical survival. In previous decades, the combination of charity work and welfare ministry, which provided financial assistance to economically vulnerable families, managed to maintain poverty below the 10% threshold. However, sanctions and the pandemic have put the survival of millions of Iranians, particularly informal and daily workers, at risk.

Around six million Iranians (a quarter of the overall workforce) work in the informal economy and earn daily wages. They often have no fixed salaries, minimal or no savings and little insurance from the social protection programs. Although these workers face a greater risk of infection, their financial situation does not allow them to stop working. Due to the fragile economic reality of Iranian people, particularly low-income citizens, the government cannot afford strict quarantine measures because these restrictions can push an additional 20% of Iranians into extreme poverty.

Moreover, according to a World Bank report, consumer price inflation stood at 30.6% from April to November 2020 and reached 46.4% in November 2020. The hyperinflation caused drastic price increases in food and housing, which disproportionally harmed working-class families.

The Way Out of the Economic Crisis

Various international and local nongovernmental organizations work tirelessly to alleviate poverty in Iran. One of the most significant NGOs that provides financial and educational resources for Iran’s vulnerable is Relief International. The organization has been particularly active since the outbreak of COVID-19. Relief International has provided multi-purpose cash assistance for 26,000 families who lost their income due to the pandemic.

Although the work of Relief International and other NGOs is significant for mitigating the impact of COVID-19 on poverty in Iran, NGOs have limited resources. Therefore, the Iranian government should play a greater role in the process of poverty reduction. For easing the short-term economic impact, the government should provide direct income assistance to its vulnerable citizens. More importantly, for a meaningful, long-term change, the Reisi administration should end the four-decade-long animosity with the U.S. and agree to the new nuclear deal. The precedent of the 2015 JCPOA agreement shows that lifting sanctions will reverse the negative economic impact of COVID-19.

– Aleksandre Jgarkava
Photo: Flickr

covid-19s-impact-on-poverty-in-indiaAreas like North America are seeing growth and recovery from the COVID-19 pandemic. However, there are still places in the world suffering from what came with living through the pandemic, especially the rise in poverty and economic struggles. COVID-19’s impact on poverty in India is especially concerning. In India, estimates determined that about 150 million to 199 million people have fallen into poverty in 2021 alone. That makes up about half of the country’s overall population.

Within just a year of fighting COVID-19 in India, the virus has infected more than 30 million people and killed about 400,000. In that time, only 4% of the population have received both vaccinations. People are continuing to struggle to get things like medicine and food, and the crisis does not stop there.

COVID-19’s Impact on Poverty in India

The COVID-19 pandemic has led to widespread economic failure, loss of jobs and homelessness. These effects have made their way to India. One year after the start of the pandemic, there had been a record 7 million jobs lost. Indian households have lost about 7% of their income.

“We’re talking about a decade of lost opportunities and setbacks, unless there are some big reforms and fundamental changes in the way that economic policy is done, you’re not going to be anywhere close to what we saw in the boom years. A lot needs to happen in order to get back to the 7%, 8% growth that we desperately need,” said Brown University Fellow Arvind Subramanian in an interview with Bloomberg.

Unemployment has historically peaked in India thanks to the pandemic, and GDP could continue dropping. Even before the pandemic, India was having trouble with its economy. The Indian government was taking steps to bring the country’s economy up significantly by the year 2025. COVID-19 in India has caused many setbacks to this plan.

New Efforts in Asia

A new initiative called The China-South Asian Countries Poverty Alleviation and Cooperative Development Centre emerged to combat and control the spread of poverty that the COVID-19 pandemic caused. Operated by China, it will also increase the livelihood and economy of the countries involved. This initiative has included several countries, such as Afghanistan, Pakistan and Sri Lanka. The initiative did not include India in the new initiative, but China has asked it to join. 

“I think South Asian countries can tremendously benefit from this Initiative. Regarding India, I’m not aware of the detailed arrangements but I think India should join this group and benefit from China’s learnings. If India wishes in my mind the group should be flexible and accommodate to involve India in the initiative,” said former Nepal ambassador to China Leela Mani Paudyal in an interview with WION.

Efforts From India

While not part of the South Asian Initiative, the Indian government has taken steps to ensure growth in the country’s economy. Projections have projected economic growth at 22.1%, and roughly 377 million people have received vaccinations. With these changes, the government hopes to see significant changes in the state of COVID-19’s impact on poverty in India.

– Demetrous Nobles
Photo: Flickr

How Vietnam improved its economy
Vietnam has seen a tremendous amount of growth in various sectors over the past three decades. This growth is largely due in part to economic reforms that have undergone implementation in the country. Before the reforms, Vietnam remained one of the poorest countries in the world. However, it has since grown to become a country with a lower-middle income. The GDP of Vietnam grew tremendously between 2002 and 2018 by increasing 2.7 times. Even in the face of the worldwide COVID-19 pandemic, the economy of Vietnam has been able to remain steadfast and resilient through trying times. Here is some information about how Vietnam improved its economy.

The Doi Moi Reforms

The Doi Moi reforms that the government implemented in 1986 helped Vietnam improved its economy. Under these reforms, Vietnam as a country took three significant steps as a country that would help improve the economy. The first of these steps was embracing free trade.

For many years, Vietnam has entered into various free trade agreements with numerous nations. One includes ASEAN, which Vietnam became a part of back in 1995. Vietnam and the U.S. partnered together by signing a free trade agreement in 2000, and seven years later, Vietnam joined the World Trade Organization. By joining these institutions and forming these alliances, Vietnam has been able to reduce the number of tariffs on imports coming into the country and exports leaving the country.

Making Changes

The second step that the Doi Moi reforms took to better the economy was implementing deregulation and making it cheaper for companies to conduct business within Vietnam. One way this occurred was through the enactment of the Law on Foreign Investment which passed in 1986. This law allowed companies from foreign countries to come into Vietnam to conduct business. Over the years, this law underwent revisions numerous times to better accommodate investors.

This law has improved Vietnam’s competitiveness tremendously over the years. In 2006, Vietnam’s global competitiveness ranked at 77. Only 11 years later in 2017, Vietnam ranked at 55 in world competitiveness. Lastly, the Doi Moi reforms aimed at improving human capital in Vietnam and improving the country’s infrastructure.

To improve the human capital of Vietnam, the government decided to prioritize education within the country. Better education is a must for Vietnam due to its ever-growing population. A larger population means more jobs and citizens must receive quality education to perform them. Infrastructure has been vitally important for the growth of Vietnam’s economy as well. Making sure that all citizens have access to internet services is important for a country due to the technological needs of the modern age.

How It Helps

Vietnam improved its economy due largely to the Doi Moi reforms. Today, the economy of Vietnam continues to flourish. In 2020, during the midst of the COVID-19 pandemic, Vietnam’s economy expanded by 2.9%. Compared to other countries at the time, this growth rate was among the highest in the world.

Since 2010, the poverty rate in Vietnam has slowly declined each year. In 2012, the poverty rate was at 40.8%. By 2018, the poverty rate fell almost by 20%, leaving it at 23.1%. As it currently stands, the Vietnamese economy continues to stay strong and grow.

– Jacob E. Lee
Photo: Flickr

COVID-19's impact on IndiaIn January 2020, India reported its first COVID-19 case, a student attending the University of Wuhan in China. As the virus spread, Prime Minister Modi ordered a massive lockdown to prevent any further spread. “If you can’t handle these 21 days, this country and your family will go back 21 years,” said Modi in an address to the nation. The lockdown worked in reducing COVID-19’s impact on India. Over time, the country managed to successfully contain the virus while the rest of the world struggled. However, difficulties were on the horizon with an impending second wave. Nevertheless, COVID-19 vaccinations bring hope to the nation of India.

A Deadly Second Wave

In April 2021, the manageability of COVID-19 cases in India took a turn for the worse. India was hit by a second wave of the virus, far more severe than the first. Religious ceremonies and political rallies exacerbated the spread of the virus, creating the perfect breeding ground for its resurgence. In May 2021, India reported COVID-19 deaths surpassing 4,000 per day. But, official tallies are most likely inaccurate due to systematic undercounting. Excess deaths, seen by pundits as a more reliable proxy for COVID-19’s impact on India, were much higher, at more than 12,000 per day during the same period. This number of excess deaths is significant compared to around 5,000 daily excess deaths in the United States at the height of the pandemic.

Major Economic Trouble

India has the sixth-largest economy in the world. The nation has long been in a position to greatly drive global poverty reduction. Thus, heavy pandemic-related casualties in the country have had the potential to magnify the national economic crisis. In 2020, sustained lockdowns and supply chain disruptions caused a sharp GDP contraction, more severe than any declines noted in the United States. Once the second wave hit in April 2021, millions of people were pushed below the poverty line almost overnight. In total, the poverty rate in India increased more than twofold.

Vaccines Bring Hope

Like other nations, India has entered a new phase of recovery, one that promises to be more durable and long-lasting than any phases in 2020. The keys to this nationwide recovery are COVID-19 vaccines and their widespread distribution. From social media to politics, Indian nationals call on the rest of the world for help, with many individuals and organizations responding. In June 2021, the White House pledged to send stockpiled doses to India.

Meanwhile, on the ground, NGOs have taken the lead. A local Delhi organization called the Centre for Holistic Development is helping to enroll eligible citizens for official COVID-19 vaccinations from the government. These efforts include homeless people living in government-managed shelters, a frequently marginalized and excluded population.

These cumulative efforts have added up. Although less than 5% of India’s massive population is fully vaccinated as of July 8, 2021, compared to 47% in the United States and 16% in China, about 22% of Indians have received at least one dose as of July 12, 2021. There is hope that this rate will increase, further slowing the spread of infection.

Going forward, mobilization from the Indian government, in combination with NGOs and international aid, has the potential to create positive conditions on the ground. The acceleration of vaccine drives will inoculate the population faster and more expansively. If all goes to plan, cases of COVID-19 in India will become manageable again and the economy will be able to fully recover as economic activity normalizes.

Zachary Lee
Photo: Flickr

WFP in Venezuela
In April 2021, the United Nations World Food Programme (WFP) reached a deal to distribute food to vulnerable school children in Venezuela. The program ambitiously seeks to help 185,000 students in 2021 alone and 1.5 million children by the end of the 2023 school year. Since schools in Venezuela remain closed due to the COVID-19 pandemic, parents and teachers can pick up rations at their local schools. A monthly ration consists of nine pounds of lentils, 13 pounds of rice, one pound of salt and one liter of vegetable oil. The WFP additionally manages its own supply chain and partners with local teachers and nongovernmental organizations to distribute food. Once schools open again, the WFP in Venezuela will also teach school faculty about food safety.

First Shipments Arrive

Recently, the first shipments of food arrived in Maracaibo, Venezuela. The stockpile includes 42,000 packages of food for this month. The WFP in Venezuela targets children under six deemed to be the most food insecure. Originally, the program began in the state of Falcón and intends to expand to other Venezuelan states gradually. The first set of rations went to a total of 277 schools in the state of Falcón.

Venezuela’s Economic Crisis

According to the Council on Foreign Relations, 96% of Venezuelans live below the poverty line. The country is heavily reliant on the export of natural gas and oil. In fact, oil makes up one-quarter of Venezuela’s gross domestic product (GDP). As oil prices dropped dramatically in 2014, Venezuela began to undergo an economic crisis. Between 2014 and 2016, oil prices had decreased from $100 to $30 per barrel. Since 2015, over 5 million Venezuelans have left the country in search of better opportunities, according to the United Nations. Additionally, Venezuela’s GDP reduced by two-thirds between 2014 and 2019.

Venezuela was once the second-largest producer of oil in the world, behind the United States. Venezuela was also a founding country of OPEC in 1960. The country has had a long history of dictatorships and consolidation of the oil industry, which the state and a select few companies controlled. Some believe that the current president, Nicolás Maduro, underwent reelection through undemocratic means in 2018. In January 2021, after Maduro had claimed victory in the election, candidate Juan Guaidó argued that Maduro had won illegitimately. The United States and several other countries acknowledged Guaidó’s victory.

Although exact figures are unknown, the WFP estimates that one-third of Venezuelans do not have enough to eat. Furthermore, approximately 16% of children suffer from malnutrition within the country. About 7 million Venezuelans are in need of humanitarian aid.

The Importance of WFP in Venezuela

The WFP in Venezuela is much needed as the country struggles economically and fails to provide for its citizens. WFP representative Susana Rico said that “We are reaching these vulnerable children at a critical stage of their lives when their brains and bodies need nutritious food to develop to their full potential.” Hence, this program will be instrumental in providing the necessary resources to underserved young children.

– Kaylee DeLand
Photo: Flickr

Uganda’s Economic Recovery
Uganda, like many other global nations, is battling the economic consequences of the COVID-19 pandemic. The pandemic reversed a decade of economic progress for the country. On June 28, 2021, the executive board of the International Monetary Fund (IMF) approved a $1 billion Extended Credit Facility (ECF) arrangement for Uganda’s economic recovery in a critical time of need.

COVID-19’s Impact on Uganda’s Economy

According to the World Bank, Uganda’s real GDP grew less than half as much in 2020 than in the year before. A four-month nationwide lockdown deterred the economic activity of the industrial and service sectors. The country’s COVID-19 lockdown forced company closures and permanent layoffs, especially in the industry and services sectors. Many informal jobs were impacted, leading to a reliance on farming for income creation and food security.

A Rise in Child Labor

A 69-page report by the Human Rights Watch and the Initiative for Social and Economic Rights explains that many families’ household incomes dropped due to the pandemic’s effects. Furthermore, with schools shut down, the burden of decreased income fell on many children. Child labor surged as many children as young as 8 years old had to work in hazardous conditions in order to provide for their families.

Nearly half of the Ugandan children interviewed in the report worked at least 10 hours a day, sometimes every day of the week. Some children even reported working as much as 16 hours a day. Most of the children only earned a meager $2 a day while subject to dangerous work conditions. Children in agriculture were injured by sharp tools used in fieldwork and “the sharp edges of sugarcane stalks.”

Other children working in quarries “suffered injuries from flying stones.” Many children also reported violence, harassment and pay theft during their employment. Many employers try to exploit child labor and maximize production. Due to these circumstances, Human Rights Watch asserts that part of Uganda’s economic recovery must include targeted assistance to households with children.

Funding From the IMF

The three-year loan approved by the board under the ECF includes the immediate disbursement of $258 million for much-needed budget support. The disbursement follows the $491.5 million release of emergency funds in May 2020 to support the post-pandemic recovery of Uganda. In an effort to strengthen Uganda’s economic recovery, authorities seek to increase household income throughout the country. Authorities are encouraging inclusive growth by investing in the development of the private sector and enacting reforms in the public sector.

Uganda’s Economic Outlook

Uganda seeks to combat its financing issues as it goes forward. Hopefully, the crucial aid from the IMF will help create jobs by investing back into the industrial and service sectors. Also, the financing aid may help children return to school as parents find new work. Economic growth in 2021 and 2022 is estimated to climb to 4.3% before reaching pre-pandemic levels of growth. While some industries such as tourism may remain subdued for a while, other sectors such as “manufacturing, construction and retail and wholesale trade” expect to rebound in 2021. However, Uganda’s economic recovery is currently still tenuous. The government will need to tread carefully as the economy remains vulnerable to the effects of COVID-19.

– Gene Kang
Photo: Flickr