The World Bank has cautioned that the coronavirus pandemic will have adverse impact on the global economy this year with the economy shrinking by 5.2 per cent. This depression is one of the worst since World War II and will trigger global poverty, the World Bank said.
In its Global Economic Prospects report, the world forum said that economic activity in rich countries is likely to fall by seven per cent with the Covid 19 pandemic disrupting domestic demand and supply, financial activities and trade.
It said that developing economies and emerging markets are likely to shrink by 2.5 per cent. The per capital income is forecast to fall by 3.6 per cent, which will push millions into extreme poverty, the World bank said.
It said that the countries hit badly by the pandemic will see the worst collapse. Moreover, the countries that rely heavily on trade, commodity exports, external financing and tourism will also have a worst time, the world organisation pointed out.
World Bank Group’s Vice President for Equitable Growth, Finance and Institutions Ceyla Pazarbasioglu said that the crisis was going to leave long lasting scars and pose major global challenges.
Noting that their first order of business was to address the global health and economic emergency, she urged the global community to unite to find ways to tackle the situation and to rebuild a robust economy. This should be done to prevent more people from falling to unemployment and poverty.
In its Global Economic Report in January before the COVID-19 outbreak was declared a pandemic, the World Bank saw a growth of 2.5 per cent in global economy.
However, the present estimates show that about 60 million people globally will be pushed to extreme poverty, World Bank Group President, David Malpass. He also said that this was likely to rise further.
He pointed out that greater debt transparency to invite new investment, a major expansion of cash safety nets for the poor and faster advances in digital connectivity will help limit the damage and build a stronger recovery.
The Global Economic Prospects report said that United States economy will shrink to 6.1 per cent this year. The euro zone output is expected to contract by 9.1 per cent. Japan’s economy is anticipated to retreat 6.1 per cent.
The growth forecast will decline 7.2 per cent in Latin America and the Caribbean, 4.7 per cent in Europe and Central Asia, 4.2 per cent in the Middle East and North Africa, 2.8 per cent in sub-Saharan Africa (the deepest on record), 2.7 per cent in South Asia and 0.5 per cent in East Asia and the Pacific.
World Bank Prospects Group Director, Ayhan Kose said that Coronavirus recession was likely to be the deepest one in advanced economies since Second World War.