The COVID-19 pandemic-induced crisis has led to significant economic losses and made the social fabric of the BRICS countries fragile by amplifying unemployment, poverty, gender disparity and migration risks, according to the BRICS Economic Bulletin released recently. The BRICS grouping consists of Brazil, Russia, India, China and South Africa.

The Reserve Bank of India released the bulletin prepared by the BRICS Contingent Reserve Arrangement (CRA) Research Group with members from BRICS central banks. India is the current chair of the BRICS. The CRA Research Group was set up to enhance research, economic analysis and surveillance capacity of the BRICS.

The crisis has indiscriminately affected all countries, adding that the BRICS were no exception as they have also been seriously hit by the pandemic and are trying to recover from it, the bulletin said. However, there is a significant heterogeneity among the BRICS in the duration and intensity of the pandemic.

“While China could largely contain the spread of the debilitating infection, other BRICS countries have witnessed multiple waves of infection,” it said.

The COVID crisis has led to significant economic losses and made the social fabric of the BRICS fragile by amplifying unemployment, poverty, gender disparity and migration risks, the bulletin noted.

As per the bulletin, there is convincing evidence of a recovery of the BRICS from the deep, pandemic-induced contraction in 2020. However, the recovery shows significant divergence amongst the BRICS members.

“China has been able to control the infections effectively which has aided its quick recovery. While the pace of economic growth is gradually picking up in India and Brazil, Russia and South Africa are yet to return to their pre-pandemic levels of economic activity,” it said.

Further, the bulletin said that since the threat of COVID remains unabated in the BRICS, it is difficult to estimate the robustness of this recovery.

“Going forward, the pace and efficacy of vaccination is going to be the most important determinant of economic recovery,” it said.

According to the bulletin, if the growth momentum in the BRICS countries, especially in China, slows down, global recovery could also see further headwinds to its growth momentum.

Apart from the uncertainty from COVID, tightening of global financial conditions and persistent economic and structural changes arising from the crisis are other factors engendering concern in the BRICS countries, it said.

The bulletin also said that BRICS countries should seize the opportunities that might emerge amid the crisis by planning for and working towards a bright post-pandemic future. https://www.fibre2fashion.com/news/textile-reports-results-news/covid-crisis-results-in-significant-economic-losses-for-brics-277919-newsdetails.htm * * *

Excerpts from BRICS Economic Bulletin

The health crisis of COVID-19 turned into an economic crisis and resulted in one of the deepest recessions experienced in many decades. The April 2021 WEO estimated that about 95 million people have fallen below the threshold of extreme poverty in 2020 compared with pre-pandemic projections. The International Labour Organisation, while studying the impact of COVID-19 on labour markets for 2020, estimated an 8.8 percent decline in working hours, 8.3 percent decline in global labour income and employment losses to the tune of 81 million. The lockdown imposed by several countries has resulted in considerable job losses in informal sectors and an exodus of migrant workers. The medium and long-term impact of the coronavirus is still unfolding as the pandemic continues to rage globally. To draw a comparison with the Spanish Flu of 1918-1920, Barro et.al, studied the macroeconomic impact of the Flu and estimated that it resulted in a 6 percent decline in real GDP per capita and 8 percent decline in real consumption. Since the COVID-19 pandemic is still not behind us, it is difficult to estimate the total economic losses due to COVID-19.

It was a challenging task to frame appropriate policies which are calibrated to the stage of the pandemic, emerging economic situation, and socio-economic circumstances of individual countries. Countries responded to the pandemic with aggressive fiscal and monetary policy support measures with a view to alleviating the adverse impact of the pandemic on the lives and livelihoods of the people. The IMF WEO April 2021 observed that unprecedented economic policy actions have prevented far worse outcomes with an estimation that the collapse could have been about at least three times as large had it not been for the swift policy support worldwide. The BRICS countries, like others, have also been proactive in providing policy support with a view to shielding against the adverse economic impact of the COVID-19 pandemic and accelerating the economic recovery post-COVID. In this process, the BRICS countries have used both conventional and unconventional measures.

While the first half of 2020 was a tale of lockdown and stringent containment, the second half of 2020 was more about opening up. While the first half of 2020 was a story of contraction, the second half of 2020 witnessed economic variables touching the pre-pandemic levels.Green shoots of economic activity have become visible; the leading indicators suggest a faster recovery; many countries have come out of negative growth and the balance of payments (BoP) variables have started behaving in a pre-pandemic mannerin the second half of 2020. So, the preliminary evidence during this period was pointing to resilience and recovery of economies in H2: 2020. However, subsequent surges in infections in the form of multiple waves and with multiple variants having greater transmissibility and lethality, raises questions about the pace, path and robustness of the recovery, going ahead.

While there are expectations of a stronger recovery in the second half of 2021 and 2022 formost of the BRICS countries, multiple issues remain to be resolved. The pertinent questions relate to divergences in the speed of recovery both across and within countries and the potential for persistent economic and structural changes arising from the crisis. While many economic indicators indicate a recovery, how robust would this recovery be? What other factors would shape the trajectory of the recovery? What structural changes would the current crisis lead to? Obviously, these are difficult questions to answer at this juncture. However, we will be able to provide some indicative answers to these questions by focusing on the behavior of economic variables, responses to the policy support, evidence of recovery and future risks and challenges.

Against the above backdrop, the BRICS Bulletin 2021, prepared by the CRA Research Group, would focus on the ‘BRICS Experience of Resilience and Recovery’. The 2020 BRICS Economic Bulletin compared the economic situation during COVID-19 pandemic (H1: 2020) with the pre-pandemic period and covered policy support and potential future areas of cooperation. While this year’s Bulletin will provide a continuity to the narrative set in last year’s Bulletin, it would primarily explore the evidence of resilience and recovery after H1: 2020. This assessment would reveal the strength and weakness of the BRICS economies in the short to medium term, indicating the reforms needed to strengthen post-pandemic growth impulses.

A BRICS collaborative study has been undertaken by a group of researchers from the BRICS central banks for the first time in 2021. The study has focused on the dynamics of balance of payments (BoP) in the BRICS during the COVID-19 period. It has made an assessment of the impact of COVID-19 crisis on balance of payments in the BRICS economies and the dominant channel of transmission vis-а-vis previous crises.