Covid-19 outbreak will contract global economic output by 5.2% in 2020, said the World Bank and it also warned that its latest forecasts would be revised downward further if uncertainty over the pandemic and business lockdowns continues
In its latest Global Economic Prospects report, the World Bank said that the advanced economies are likely to shrink 7.0% in 2020, while emerging market economies will be contracting by 2.5%, their first since aggregate data became available in 1960. On a per-capita GDP basis, the global narrowing will be the highest since 1945-46 as World War Two spending dried up.
The updated forecasts by the World Bank reveal further damage to the economy than the estimates released in April by the International Monetary Fund, which predicted a 3.0% global contraction in 2020.
The IMF is planning to update its forecasts on June 24 and Managing Director Kristalina Georgieva has said that added cuts are “very likely.”
“If that scenario materializes, the downside scenario, we are expecting a very sluggish recovery in 2021,” World Bank Prospects Group Director Ayhan Kose told reporters. “Global growth barely would begin to recover” at around 1.3% next year.
The new forecasts also augmented the World Bank’s estimate of how many people will be dragged into extreme poverty by the pandemic, to between 70 million and 100 million from a previous estimate of over 60 million.
The World Bank report revealed that in 2020 narrowing of 6.1% for the United States and Japan, a 9.1% contraction for the euro zone, 8.0% for Brazil and 3.2% for India. China is expected to maintain growth of 1.0% in 2020, down from a January forecast of 6.0%.