Economic growth in BRICS countries will be jeopardized if the recession caused by the COVID-19 pandemic continues over a long period, Leslie Maasdorp, the vice president and chief financial officer of the New Development Bank (NDB), told Sputnik, adding that long-term investment in infrastructure was crucial at this stage
MOSCOW (Pakistan Point News / Sputnik - 30th July, 2020) Economic growth in BRICS countries will be jeopardized if the recession caused by the COVID-19 pandemic continues over a long period, Leslie Maasdorp, the vice president and chief financial officer of the New Development Bank (NDB), told Sputnik, adding that long-term investment in infrastructure was crucial at this stage.
"We are very concerned right now that if this recession goes on for long, it could really undermine the economic progress that a lot of BRICS countries have made in the last 20-25 years. Brazil has gone through a rapid growth phase in the early 2000s, for almost ten years, South Africa has also grown in the period leading to the financial crisis and now has been stagnating for many years ... It's very important for the countries to try and reverse this economic decline and we want to help them with that by investing in infrastructure," Maasdorp said.
BRICS member countries are working intensively to protect the economic gains made over recent years, despite the short-term difficulties caused by the ongoing pandemic, the NDB vice president said.
"All of our economies are going through major contraction. There is economic decline, a significant reduction in economic growth in all of our countries. South Africa is in recession, Brazil is in recession, India's growth will be significantly down from 2019. China's growth is also going to be significantly down. The BRICS countries, as a whole, are very focused now on ensuring that they can get the countries back to the economic growth scenario," Maasdorp remarked.
The NDB views long-term infrastructure investment as a crucial means of ensuring future economic growth and consolidating past gains, which will help member countries navigate their way out of the current crisis, the vice president added.
"And in doing that, banks like ours have become even more critical because we invest in infrastructure. We finance projects for long-term infrastructure like power, ports, railways, airports, bridges, etc. This is critical infrastructure that connects markets, connects people, and lays the productive basis for the economy to grow in the future and it raises the productivity of the economy. It becomes even more important during times of economic decline, like the current economic recession, to invest in infrastructure... so that when the economy gets back onto a growth path you have that infrastructure in place," Maasdorp said.
As of June, the International Monetary Fund (IMF) estimates that the global economy will contract by 4.9 percent in 2020 due to the disruption to world markets caused by the coronavirus disease pandemic.
The world's economy is expected to rebound with growth of 5.4 percent in 2021, according to the IMF, although this figure has been revised down from predictions made before the onset of COVID-19.