New York: The global economy is expected to shrink by about 5.2% in 2020 as a result of the coronavirus pandemic, the World Bank said Monday.
Never before have so many countries entered a recession at once, even during three more severe episodes—the Great Depression and the downturns following the two world wars, the bank said.
The bank’s estimate is more pessimistic than the global economic outlook released by the International Monetary Fund in April. The deeper downturn it forecasts in part reflects the clearer picture of the fallout that has emerged since the IMF’s forecast.
Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in at least sixty years. Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year.
The World Bank semiannual forecast for the global economy predicts a rebound next year, with growth of 4.2%. Even so, the report underscores the extent of the damage that has been wrought on economic activity around the world, even as many wealthy countries begin to emerge from lockdowns.
The World Bank expects the U.S. economy to shrink 6.1% in 2020, followed by a 4% rebound next year. The euro area will shrink 9.1%, followed by a 4.5% rebound.
China will be one of the few countries to expand this year, the bank said, with 1% growth followed by a 6.9% rebound in 2021. Even China’s economic performance will be the weakest in around 45 years.
The World Bank, the international lender that is collectively owned by 189 member countries and with the U.S. as the largest shareholder, is mobilizing up to $160 billion in resources to help countries weather the pandemic and rescue their economies. Even with these efforts, the bank said that as many as 70 million to 100 million people around the world will be pushed into extreme poverty — defined as living on less than $1.90 a day.