The global COVID-19 pandemic has had a significant impact on the economies of developing countries. This health crisis not only caused a spike in death rates, but also triggered a severe economic recession. Important sectors such as trade, tourism and remittances experienced drastic declines. The trade sector was affected as many countries implemented strict lockdown policies, hampering supply chains and distribution of goods. Exports of key commodities, including oil and food, declined sharply, resulting in a loss of state revenue. A survey from the World Bank noted that developing countries’ export earnings fell by up to 20% amid the pandemic, resulting in slow or even negative economic growth. Tourism, which is a major source of income for several developing countries, is also being hit hard. Many tourist destinations were closed, and the flow of global tourists stopped. According to a UNWTO report, the decline in international tourist arrivals reached 74% in 2020. This not only results in job losses, but also reduces tax revenues which are vital for infrastructure development. Additionally, remittances from migrant workers, a major source of income for many families in developing countries, stagnated. Widespread wage cuts and layoffs in developed countries are reducing the amount of remittances sent, disrupting families’ ability to meet basic needs. It is estimated that global remittances fell by 20% in 2020, complicating the economic situation in senders’ home countries. The health sector is also under great pressure in developing countries, which often lack adequate health infrastructure. Limited funding to tackle the pandemic is hampering efforts to distribute vaccines and basic health services, exacerbating the economic crisis. As a result, many countries were forced to ask for international assistance to deal with the virus and economic recovery. In the long term, the economic impact of the pandemic will likely deepen inequality. Developing countries that were already vulnerable now face greater challenges in recovery efforts. Cooperatives and Small and Medium Enterprises (SMEs), which are the backbone of the local economy, have difficulty obtaining capital and access to markets. Governments in developing countries are expected to implement responsive fiscal policies and social protection programs. Distribution of direct cash assistance and subsidies to affected sectors could be the right first step to mitigate the wider economic impact. Increasing investment in digital technology and education also needs to be prioritized so that the economy can transform and adapt to new needs in the post-pandemic era. Investors and financial institutions also need to play an active role in supporting recovery. Attention to sustainability must be the focus, ensuring that new economic construction is more resilient and flexible. Therefore, collaboration between the state, private sector and civil society is key to minimizing the lasting impact of this pandemic.
