The International Monetary Fund has warned Nigeria and other emerging economies to quickly repair their weak labor markets and severe school disruptions to avoid plunging their economies into further damage.
In a new report titled “Healing the economic scars of the pandemic requires swift action,” the Washington-based lender said pandemic-induced losses to economic output and employment would be significant in coming years, as reported in its April World Economic Outlook.
According to the report, emerging market economies were at risk of greater losses because they had relatively less access to vaccines and their pandemic support programs were smaller. For many economies, the outbreak of war in Ukraine has added to the challenges, he noted.
The report reads in part: “Our new analytical work reveals that, among the main causes of the scars of the pandemic are the weak potential recovery of the labor market in emerging market economies and the severe disruptions in schooling during of the last two years in advanced and emerging countries. savings. Policymakers must act quickly to repair the damage caused by the crisis and prevent decades of decline in economic output due to the loss of human capital.
The report adds that recessions often have lasting effects on workers who lost their jobs at the height of the recession. They could struggle to get new jobs during the recovery and could lose some skills due to prolonged unemployment, he said, noting that such losses hurt affected workers and also reduce overall economic output.
It further reads: “In addition to challenges in the labor market and school disruption, there are also other channels of healing. For example, rising corporate debt and vulnerabilities in industries hardest hit by the pandemic could also contribute to the scarring by weighing on investment and productivity for years to come, according to new research presented. in the IMF’s April World Economic Outlook.
According to the IMF, time was short to limit learning losses because education was cumulative, with each year building on the previous one. To minimize lasting damage, countries need to quickly assess learning setbacks and implement appropriate measures to help students.
“In addition, pandemic-era support measures for businesses and workers that have helped limit the scars of the pandemic, such as credit guarantees and job retention policies, will need to be reduced as the recovery strengthens. This will help avoid delaying the reallocation of workers and resources to their most productive uses as the pandemic subsides, and help foster productivity growth.
“Instead, policies could help people adapt to changing labor markets, for example through well-targeted job search programs and additional training support to acquire new skills. Moreover, to limit high pockets of corporate distress that turn into corporate bankruptcies or significant investment declines, it is also crucial to ensure the proper functioning of corporate insolvency and out-of-court restructuring mechanisms,” still says the report.
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