Economic activity contracted in 90 per cent of the world’s countries in 2020. This exceeded the proportion hit by the two world wars, the Great Depression and the global financial crisis. A pandemic, we now know, is a comprehensive disaster. It also bequeaths ill health and social and economic disruption. Among the most long-lasting legacies could be financial ones, especially in emerging and developing countries. The spectre of a lost decade looms for vulnerable nations. Determined action will be needed to prevent this. (See charts.)

That is the theme of the latest World Development Report (WDR), entitled Finance for an Equitable Recovery, which was prepared under the direction of World Bank chief economist, Carmen Reinhart, a renowned expert on global finance. She notes, “In 2020, the average total debt burden of low- and middle-income countries increased by roughly 9 percentage points of the gross domestic product, compared with an average annual increase of 1.9 percentage points over the previous decades. Fifty-one countries (including 44 emerging economies) experienced a downgrade in their sovereign debt credit rating.” Fifty-three per cent of low-income nations are now seen to be at high risk of debt distress.

Sharp rises in indebtedness were a necessary response to the pandemic. Indeed, the problem for most emerging and developing countries was that they could afford to borrow too little, with grave results for their populations. Partly as a result, Covid has increased inequality not only inside countries, but also between them. Not least, the number of people in extreme poverty jumped by 80mn in 2020, much the largest such rise in a generation.