Developing countries will struggle with lasting effects of COVID-19 - World Bank
WASHINGTON, CMC – The World Bank said Tuesday even as the global economy is expected to expand by nearly six per cent this year, many emerging markets and developing economies will continue to struggle with the coronavirus (COVID-19) pandemic and its aftermath.
In its June 2021 Global Economic Prospects, the Washington-based financial institution said that growth will be 5.6 per cent this year, making it the fastest post-recession pace in 80 years, largely on strong rebounds from a few major economies.
It said despite the recovery, global output will be about two per cent below pre-pandemic projections by the end of this year.
“Per capita income losses will not be unwound by 2022 for about two-thirds of emerging markets 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,” the bank said.
World Bank Group President, David Malpass, said while there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.
“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,” he added.
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 World Bank noted.
It said emerging markets and developing economies as a group is forecast to expand six 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.
The World Bank is also predicting that per capita income in many emerging markets 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.
It said major drivers of growth had been expected to lose momentum even before the COVID-19 crisis, and the trend is likely to be amplified by the scarring effects of the pandemic.
Low-income economies are forecast to expand by 2.9 per cent in 2021 before picking up to 4.7 per cent next year.
The group's output level in 2022 is projected to be 4.9 per cent lower than pre-pandemic projections.
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