By Adedapo Adesanya
The World Bank in a new projection has said that the global economy will shrink by 5.2 percent this year as a result of the swift and massive shock of the COVID-19 pandemic.
According to the Bretton Wood Institution, the contraction would represent the deepest recession since the World War II, with the largest fraction of economies experiencing declines in per capita output since 1870.
The projection was contained in the bank’s June 2020 Global Economic Prospects, which also said that the swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction.
The bank further pointed out that economic activities in advanced economies are anticipated to shrink 7 percent in 2020 as domestic demand and supply, trade, and finance have been severely disrupted.
As for emerging market and developing economies (EMDEs), they are expected to shrink by 2.5 percent this year, their first contraction as a group in at least 60 years.
Per capita incomes are expected to decline by 3.6 percent, which will see millions of people plunge into extreme poverty this year.
The bank further said the blow is hitting hardest on countries where the pandemic has been most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing.
The bank noted – “While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks.
“Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.”
According to the bank, every region is subject to substantial growth downgrades. East Asia and the Pacific will grow by a scant 0.5 percent. South Asia will contract by 2.7 percent, Sub-Saharan Africa by 2.8 percent, Middle East and North Africa by 4.2 percent, Europe and Central Asia by 4.7 percent, and Latin America by 7.2 percent.
The bank noted that policies to rebuild both in the short and long-term entail strengthening health services and putting in place targeted stimulus measures to help reignite growth, including support for the private sector and getting money directly to people.
Making a recommendation for recovery, the World Bank noted that countries should focus on sustaining economic activity with support for households, firms and essential services.
It added that global coordination and cooperation, including international support will provide the greatest chance of achieving public health goals and enabling a robust global recovery.
