The coronavirus will plunge the global economy into its deepest recession since the Second World War.
The World Bank today, June 8, said the swift and massive shock of COVID-19 will force the world’s economy to shrink by 5.2 per cent this year.
The economic impact of the virus was worsened by widespread shutdowns on industries and travel that further pushed the economy towards a severe contraction.
“Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment.”– World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu
What’s more, the most advanced economies will see their economic activities decline by seven per cent this year as domestic demand and supply, trade and finance are disrupted, said according to the Bank’s June 2020 Global Economic Prospect report.
“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 Bank said.
It added that the harshest blow was being felt by countries where the virus impact has been severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing.
Further, it said the interruptions on education and primary healthcare access will have a long-term impact on human capital development.
World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu, said “This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges.
“Our first order of business is to address the global health and economic emergency. Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment,” Pazarbasioglu said.
Using its baseline forecast, the World Bank said global growth is forecast to rebound to 4.2 per cent next year. Despite this estimate, it said the outlook is uncertain and that the downside risks likely amid the possibility of financial upheaval, and retreat from global trade and supply linkages.