The global economy is expected to expand 5.6 per cent in 2021, the fastest post-recession pace in 80 years, largely on strong rebounds from a few major economies, the World Bank said on Tuesday, noting that despite the recovery, global output will be about two per cent below pre-pandemic projections by the end of this year. In its latest edition of Global Economic Prospects, the World Bank said that at the same time many emerging markets and developing economies continue to struggle with the COVID-19 pandemic and its aftermath.
“While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world,” said World Bank Group President David Malpass. “Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries. As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability, Malpass said.
The report also noted that per capita income losses will not be unwound by 2022 for about two-thirds of emerging market and developing economies. Among low-income economies, where vaccination has lagged, the effects of the pandemic have reversed poverty reduction gains and aggravated insecurity and other long-standing challenges. Among major economies, US growth is projected to reach 6.8 per cent this year, reflecting large-scale fiscal support and the easing of pandemic restrictions. Growth in other advanced economies is also firming, but to a lesser extent.
Among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand, the Bank said in its report. Emerging market and developing economies as a group are forecast to expand 6 per cent this year, supported by higher demand and elevated commodity prices.
However, the recovery in many countries is being held back by a resurgence of COVID-19 cases and lagging vaccination progress, as well as the withdrawal of policy support in some instances, said the report. “Excluding China, the rebound in this group of countries is anticipated to be a more modest 4.4 per cent. The recovery among emerging market and developing economies is forecast to moderate to 4.7 per cent in 2022. Even so, gains in this group of economies are not sufficient to recoup losses experienced during the 2020 recession, and output in 2022 is expected to be 4.1 per cent below pre-pandemic projections, it said.
Per capita income in many emerging market and developing economies is also expected to remain below pre-pandemic levels, and losses are anticipated to worsen deprivations associated with health, education and living standards. The Bank said growth in low-income economies this year is anticipated to be the slowest in the past 20 years other than 2020, partly reflecting the very slow pace of vaccination. Low-income economies are forecast to expand by 2.9 per cent in 2021 before picking up to 4.7 per cent in 2022.
The group’s output level in 2022 is projected to be 4.9 per cent lower than pre-pandemic projections.