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Economic and food security implications of the COVID-19 outbreak: An update focusing on the domestic fallout of local lockdowns

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Authors:
Arif Husain, Director of Research Assessment and Monitoring Division (RAM)
Susanna Sandström, Head Economic and Market Unit RAM Friederike Greb, Economist RAM Peter Agamile, Economist Early Warning Unit

The evolving pandemic poses an evolving threat to food security

Global food security has been deteriorating in recent years due to conflicts, climate shocks, economic downturns and desert locust. The COVID-19 pandemic could drive up the increase in acute hunger over the past four years to more than 80 percent. The global economic outlook looks increasingly grim, reflected in the IMF’s revision of its estimates to -4.9 percent global GDP contraction in 2020, 2.1 percentage points below the April forecast. Moreover, the geographic spread of COVID-19 cases has continued to evolve – and with it the challenges that poor countries face (Figure 1). After China, Europe and the US, Latin America has emerged as the epicenter of the pandemic. South Asia’s curve of weekly new cases has a worryingly steep slope too. As of mid-June, two out of three new confirmed cases are in low- and middle-income countries. While these countries are trying to cope with the fallout of an increasingly severe global economic recession, they are also battling the disease at home. This brief, therefore, shifts attention from the external to the domestic shock, complementing the analysis of countries at risk of worsening food insecurity in earlier updates.

The food security costs of a domestic COVID-19 outbreak and the ensuing restrictions can dwarf those of the global economic recession or hiccups in international food trade. While the picture is still incomplete, early indications from IFPRI country studies suggest that this is the case, at least for now. For example, in Nigeria they find a 38 percent reduction in GDP during the country’s five-week lockdown, a staggering contraction both in speed and magnitude. Behind such numbers are families losing their income including many living hand-to-mouth, dependent on unprotected informal daily wage workers, whose economic access to food is immediately jeopardized. The threat to economic access to food comes hand in hand with one to physical access. Movement restrictions can put local food supply chains at risk. Whereas food imports play an important role in poor countries, especially for an adequate supply of staples, their relevance pales relative to that of the domestic food system. The latter accounts for about 80 percent of what people eat in Africa and Asia, and more than 90 percent in Latin America.

Concerns around the delicacy of lockdowns in developing countries have been voiced, but the potential unintended consequences are only beginning to unravel. Benefits are far less obvious in lower income contexts than in China, Europe or the United States; and trade-offs different. Isolation measures help to ‘flatten the curve’ and delay infections, thus enabling health systems to cope and preventing deaths, but what is the rationale for spreading out infections in time when health systems are so weak – Mali and Mozambique each have one ventilator per million inhabitants – that they are immediately overwhelmed and inaccessible to a large part of the population? An attempt to quantify the economic value of social distancing policies puts it at 240 times larger in the United States than in Nigeria or Pakistan; India’s nationwide lockdown, which ended after 2.5 months on 1 June amidst new infections hitting record highs, has been exposed as a choice between lives and lives in the absence of appropriate social protection measures; and Malawi’s National Planning Commission recently found that even in case of a moderate lockdown, costs vastly outweigh benefits. The London School of Health and Tropical Medicine calculates that when closing vaccination clinics in Africa more than 80 children die due to the lack of routine immunization for each COVID-19 death averted. Similarly, the Johns Hopkins Bloomberg School of Public Health shows that, in the worst-case scenario,

1.2 million children under-five could die over the next six months because of COVID-19 specific disruptions to health services and increased child wasting. Needless to say, the threat to food security, which has been flagged repeatedly including by prominent observers such as Nobel laureates Amartya Sen and Abhijit Banerjee, is one of the most worrying repercussions of lockdowns in low and middle-income countries.