A report published by the United Nations Conference on Trade and Development (UNCT) has warned that the global economy is likely to contract by 4.3 percent in 2020.

The report further noted that the looming economic crisis due to the COVID-19 may wipeout around USD 6 trillion global markets.

In its report titled From Global Pandemic to Prosperity for All: Avoiding Another Lost Decade, UNCTAD argues that “the idea that cuts in government spending can lead to economic growth – was an ineffective and ultimately destructive policy response to the 2008 global financial crisis, fostering weak demand, sluggish investment and tepid growth.”

IT notes that lockdowns worldwide have thrown economic challenges that the world has never seen before. The report predicts that the ongoing economic crisis may wipe out the Brazilian, Indian and Mexican economies.

"In the wake of these shocks the global economy will contract by an estimated 4.3 percent this year, leaving global output by year's end over USD 6 trillion short (in current US dollars) of what economists had expected it to be before the Covid-19 pathogen began to spread,” UNCTAD said.

"But the greatest economic and social damage will be in the developing world where levels of informality are high, there is continued reliance on a few commodities or tourism as a source of foreign exchange, and fiscal and policy space is limited," said UNCTAD report.

However, it cautioned that it is important to take calculated steps in the road to recovery. "Neither path is preordained. Building a better world is a matter of conviction and collective action. The lives of future generations and of the planet itself will depend on the choices we all take over the coming months," one official said while addressing the forum.

The UN expects that COVID-19 will push around 100 million people to extreme poverty in the developing world.

If governments opt for premature fiscal tightening in an attempt to bring down public debt and businesses adopt an aggressive cost-cutting strategy in an attempt to boost exports, the recovery will likely fizzle out, with a double-dip recession a real possibility in many countries in 2022,” it warned.