UNITED NATIONS  : Developing countries, including Pakistan, will be hit hardest by the economic shockwaves caused by the novel coronavirus crisis that has shaken the world and will need a support package of up to $2.5 trillion to cope with the damage, a United Nations report has predicted.

According to a report by the UN Conference on Trade and Development (UNCTAD), which was released on Monday, Pakistan, Argentina and the Sub-Saharan African countries would face a “frightening combination” crises including mounting debts, a potential deflationary spiral as well as a disastrous impact on the health sector. Their economies will take “enormous hit” from high capital outflows, lost export earnings due to falling commodity prices and currency depreciations, with an overall impact likely worse than the 2008 crisis, the report said. “It’s going to be really bad,” said Richard Kozul-Wright, director of globalisation and development strategies at UNCTAD who oversaw the report.

“The international institutions have to take these sorts of proposals very, very seriously as it’s the only way that we can see to prevent the damage already taking place and which will get worse,” he added. In what he said was likely a conservative estimate, Kozul-Wright said the coronavirus would cause a $2-$3 trillion financing deficit over this year and next. In an early sign of the impact, portfolio outflows from main emerging economies were $59 billion a month between February and March compared to $26.7 billion in the immediate aftermath of the 2008 crisis, the report said.

Developing countries will need a $2.5 trillion support package this year to face the economic crisis, the report said. Needed measures will include a $1 trillion liquidity injection and a $1 trillion debt relief package and another $500 million will be needed for emergency health services and related programmes, on top of capital controls.

The figures in the report titled “The Covid-19 Shock to Developing Countries” echoed an earlier estimate by the International Monetary Fund. UNCTAD considers around 170 countries to be developing but the financing gap figure stripped out China and South Korea. “If G20 leaders are to stick to their commitment of ‘a global response in the spirit of solidarity’, there must be commensurate action for the six billion people living outside the core G20 economies,” Kozul-Wright said. Leaders of the Group of 20 major economies had pledged on Thursday to inject more than $5 trillion into the global economy to limit job and income losses from the coronavirus and “do whatever it takes to overcome the pandemic”.