An article in Botswana’s Sunday Standard paints a particularly dreary outlook of the impacts of the recession on the developing world:

“……What then appears as minimal trauma to the African economies in relation to the volcanic eruptions in America and Europe, nevertheless, portends astronomic suffering for the economies of the underdeveloped countries. In other words, what looks small for America is inordinately large for Latin America, Asia and most particularly the poorest continent, Africa.”

And in particular refers to the ‘abolition of social welfare and other safety nets for the old, sickly, illiterate, students, the disabled and people living with HIV-AIDS.’ Just what degree of devastation is the financial crisis likely to wreak on any progress made towards reaching the Millenium Development Goals?

The World Bank states that in particular, improvements in infant mortality will be most negatively affected by the current financial crisis. Preliminary estimates for 2009 to 2015 forecast that an average 200,000 to 400,000 more children a year, a total of 1.4 to 2.8 million, may die if the crisis persists. Poverty levels will inevitably be exacerbated and the Bank predicts that lower economic growth will trap a further 46 million people under the poverty line of $1.25 a day (than was expected before the crisis hit). This is on top of the 130-135 million people pushed into poverty in 2008 because of soaring food and fuel prices. Other potential impacts include falling funding for HIV and Aids. The recession has conjured fear in Uganda that funding for its 5 year national strategic plan to decrease the number of new infections will dry up as global donors face financial crises. The UK and US Governments have been significant funders in the past.  In terms of drugs and other diseases the recession may affted the research and development of new drugs. ESRC argues that investment into new drugs is under threat as former investors shy away from potential risky investments.

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The IMF argues, in its most emotionless tone, that ‘the recession will bring about a decline in resource flows to Africa, in the form of private capital, remittances, and even aid. There will be weaker commodity prices for exports and this could slow growth. There will be upward pressure on inflation as a result of (12%) food and fuel shocks. Poverty is therefore likely to be on a rise. The loss in purchasing power of the poor is a major concern.’ Oxfam argues that the IMF’s predictions are likely to be under-estimations and more pessimism is warranted. The UN World Institute for Development Economics Research argues to the contrary and suggests that some optimism is justified on the grounds that developing countries will be affected very differently, depending on countries’ vulnerability to different channels (financial). For example, those highly indebted to the US are likely to be the most severely affected. However, the report argues that ‘many developing countries, from many in Africa to the large emerging markets of Brazil, China and India, will continue to grow at relatively strong rates, cushioning the impact for others’. Despite the probably well-founded argument that countries will be affected to differing degrees, surely urgent, substantial and wide-reaching action that goes someway to taking a proactive rather than re-active approach is preferable to ‘let’s hope for the best and see what happens’?

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