The global economy will grow 4% in 2021 and 3.8% in 2022, after suffering a contraction of 4.3% in 2020, assuming that the initial distribution of Covid-19 vaccines is expanded to throughout the year, according to the latest projections from the World Bank, which warns that, if infections continue to increase and vaccine distribution is delayed, the expansion of global GDP will be limited to 1.6%.
On the other hand, in an optimistic scenario, with successful control of the pandemic and a faster vaccination process, world growth could accelerate to almost 5%, the institution points out.
According to the institution’s baseline scenario, the GDP of advanced economies, which suffered a 5.4% drop in 2019, will grow this year by 3.3% and will accelerate in 2022 to 3.5%, while in the case of emerging and developing economies, GDP will grow by 5% in 2021 and 4.2% in 2022, after the contraction of 2.6% estimated in 2020.
Among the most developed economies, the World Bank forecasts that the United States will register an expansion of 3.5% in 2021 and 3.3% in 2022, after falling 3.6% last year. In turn, the euro zone, for which it estimates a contraction of 7.4% in 2020, will rebound by 3.6% in 2021 and 4% in 2022.
For its part, among emerging economies, the World Bank anticipates a China’s GDP growth of 7.9% in 2021 and 5.2% in 2022, after managing to weather the Covid-19 crisis better than the rest of the countries, with a growth of 2% in 2020.
In the case of India, the institution’s forecasts point to a GDP rebound of 5.4% this year and 5.2% the following, after the collapse of 9.6% estimated for 2020.
World Bank Recommendations
In your report World Economic Outlook, the institution warns of the risk that the impact of the pandemic threatens to depress economic activity and income for a prolonged period and points to the controlling the spread of Covid-19 and ensuring rapid and wide distribution of vaccines as top short-term political priorities.
Also, to promote economic recovery, the World Bank calls on the authorities to facilitate a reinvestment cycle aimed at achieving sustainable growth that is less dependent on public debt.
As has happened in the past with other serious crises, the pandemic is expected to have long-lasting adverse effects on global activity, says the institution, for which the slowdown in global growth expected for the next decade is likely to worsen due to the lack of investment, underemployment, and a shrinking workforce in many advanced economies.
“If history can be any reference, the world economy is heading toward a disappointing decade for growth, unless policymakers implement comprehensive reforms that enhance the drivers for equitable and sustainable economic growth, “it warns.
In this sense, it affirms that the authorities responsible for economic policies “must continue to sustain the recovery”, gradually moving from income support to policies to promote growth.
“While the global economy appears to have entered a moderate recovery, policymakers face enormous challenges in trying to ensure that this still fragile global recovery gains momentum and lays the foundation for robust growth. “said David Malpass, president of the World Bank Group.
“To overcome the impacts of the pandemic and counteract the adverse factors that affect investments, it is necessary to give a great impulse to the improvement of the business environment, increase the flexibility of the labor and product markets, and strengthen transparency and governance”, he added.
In addition, it will also be necessary to address financial weaknesses of many of those countriesas the growth crisis affects household budgets and the balance sheets of vulnerable companies, warned Carmen Reinhart, vice president and first economist of the World Bank.
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