The global economy is anticipated to grow four percent this year, providing COVID-19 vaccines are widely launched, according to The World Bank’s January 2021 Global Economic Prospects.
“While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges — in public health, debt management, budget policies, central banking and structural reforms — as they try to ensure that this still fragile global recovery gains traction and sets a foundation for robust growth,” World Bank Group President David Malpass said in a press release on Tuesday this week.
He added in the release that in order to move past the pandemic’s repercussions and “counter the investment headwind” it will be necessary to improve business frameworks, advance market flexibility and “strengthen transparency and governance.”
The worldwide economy is on the upswing following 2020’s 4.3 percent shrinkage, but the pandemic’s impact made many people destitute, according to the release. Economic buzz and income levels could further be dampened if a re-investment cycle focusing on sustainable growth is not implemented.
The forecasted tanking of the 2020 global economy was better than anticipated, however emerging economies were hit harder than originally forecasted, the release stated.
“Financial fragilities in many of these countries, as the growth shock impacts vulnerable household and business balance sheets, will also need to be addressed,” said Carmen Reinhart, vice president and World Bank Group chief economist, in the release.
If virus cases continue to accelerate and the vaccine is delayed, global expansion could be limited to 1.6 percent this year, according to the release. On the flip side, worldwide growth could hit close to 5 percent if the pandemic is successfully managed and vaccines are quickly deployed.
Gross domestic product (GDP) in the U.S. is anticipated to grow 3.5 percent this year following 2020’s estimated 3.6 percent contraction, the release stated. Aggregate GDP in China and other emerging and developing economies is anticipated to expand 5 percent in 2021, following a 2.6 percent contraction in 2020.
Not counting China, emerging markets are expected to grow 3.4 percent after shrinkage of 5 percent in 2020. In low-income economies, 3.3 growth is anticipated in 2021, following a 0.9 percent contraction last year, according to the release.
“The pandemic has greatly exacerbated debt risks in emerging market[s] and developing economies; weak growth prospects will likely further increase debt burdens and erode borrowers’ ability to service debt,” said Ayhan Kose, World Bank acting vice president for Equitable Growth and Financial Institutions, in the release.
China is expected to be the first major economy to recover from the recession triggered by the worldwide pandemic, the Organization for Economic Cooperation and Development (OECD) said, per a PYMNTS report.
In September, the International Monetary Fund (IMF) said the global economic recovery could be stifled in emerging markets, in part due to elevated debt levels.
The World Bank said in October that the pandemic could push 150 million people — 9.1 percent to 9.4 percent of the world’s population — into extreme poverty, with less than $1.90 per day to live on. – PYMNTS.com