The COVID-19 pandemic will shrink the global economy by 5.2 per cent this year, representing the deepest recession since World War Two, and triggering a dramatic rise in extreme poverty, the World Bank said Monday in its latest Global Economic Prospects report.
In rich countries, economic activity is expected to decline by seven per cent as the coronavirus outbreak severely disrupts domestic demand and supply, trade and finance activities, it said. Emerging market and developing economies are due to shrink by 2.5 per cent – their first contraction as a group in at least 60 years. Per capita incomes, meanwhile, are forecast to fall by 3.6 per cent – tipping millions into extreme poverty.
Hardest hit are those countries where the pandemic has been most severe and where there is a heavy reliance on global trade, tourism, commodity exports and external financing, the report said. Last week, the World Bank released analytical chapters from the latest Global Economic Prospects report which emphasized that developing countries and the international community can take steps now, to speed recovery, after the worst of the health crisis has passed, in order to blunt some long-term adverse effects.
According to the Global Economic Prospects report, the United States economy is forecast to contract 6.1 per cent this year, while euro zone output is expected to shrink around 9.1 per cent. Japan’s economy is anticipated to retreat 6.1 per cent. Elsewhere, growth is forecast to decline 7.2 per cent in Latin America and the Caribbean, 4.7 per cent in Europe and Central Asia, 4.2 per cent in the Middle East and North Africa, 2.8 per cent in sub-Saharan Africa (the deepest on record), 2.7 per cent in South Asia and 0.5 per cent in East Asia and the Pacific (the lowest rate since 1967).
Source: The UN
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