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Wednesday, 06 January 2021_The World Bank on Tuesday downgraded its outlook for the global economy, and warned the situation could deteriorate if Covid-19 infections accelerate or the vaccine rollout is delayed.
The coronavirus pandemic also has worsened the risks surrounding the rising debt load in developing nations, and it will take a global effort to avoid a new crisis in those economies, the bank cautioned.
After shrinking 4.3 percent in 2020, the world economy is projected to grow by 4.0 percent this year, two-tenths lower than previously forecast, as more than half of countries were downgraded in the semi-annual Global Economic Prospects report.
China was a bright spot with a surprisingly fast recovery in 2020, but advanced countries which did better last year will fare worse in 2021, the bank said.
The report warns the outlook remains "highly uncertain," and GDP growth could be as low as 1.6 percent this year if the downside risks materialize.
With millions driven into poverty by the coronavirus recession, countries will need to find a way to move beyond direct aid and reignite investment to stimulate growth, the Washington-based development lender urged.
Policymakers face "formidable challenges... as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth," World Bank President David Malpass said.
The expectation for a subdued recovery "assumes that vaccine rollout becomes widespread" and the economic reopening continues, Malpass told reporters.
But even if the pace of growth holds steady, global GDP in 2022 will be 4.4 percent below pre-pandemic levels, the bank said.
And, further out, the "lasting damage to health, education and balance sheets" may lower the global economy's potential output, the report said.
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