Washington, United States.
The World Bank on Tuesday released a pessimistic diagnosis of the global economy, covid-19-sick, and has warned that its recovery will largely depend on how quickly massive vaccination campaigns are deployed.
The institution reduced its growth forecast for the world by 2021, although it considers that the fall of the economy in 2020 was “less strong” than feared, with a decline of 4.3% compared to 4 , 5% forecast last June.
World GDP is expected to grow by 4% this year, a reduction of 0.2 percentage points compared to the last projection, the institution details in its global economic outlook.
The new forecasts are a reflection of the panorama at the end of 2020 around the globe, where covid-19 infections continue to increase and new variants of the coronavirus have emerged, leading to new restrictions that further disrupt activity. economic.
These setbacks have also led, according to the World Bank, to a “considerable” reduction in public and private revenues. On the one hand, tax revenues have fallen and on the other, mass layoffs have affected the purchasing power of households.
“The recovery is likely to be moderate, unless policy makers act decisively to control the pandemic and implement reforms that increase investment,” warns the institution, which believes the short-term outlook remains very high. uncertain “.
The most pessimistic scenario, if covid-19 infections continue to grow and vaccination campaigns are delayed, predicts an expansion of only 1.6% in 2021.
By contrast, the most optimistic hypothesis – pandemic control and acceleration of vaccinations – points to a growth of almost 5%.
Slight recovery
In Latin America and the Caribbean, the multilateral agency forecasts an economic expansion of 3.7% this year, improving on its previous forecast of 2.8% growth for the region, released in June.
“Regional economic activity is expected to grow by 3.7% in 2021, as initiatives to mitigate the pandemic become more flexible, vaccines are distributed, prices of major commodities stabilize and external conditions improve.” , said the World Bank.
However, he stressed that the recovery, which will come after a decade of slow growth, “will be very slight”.
And he warned that a negative scenario, with delays in the distribution of the covid-19 vaccine and side economic effects, could reduce the increase in gross domestic product (GDP) to 1.9%.
In the United States, after an estimated contraction of 3.6% in 2020, GDP is expected to rise to 3.5% in 2021, 0.5 percentage points less than the previous forecast.
The eurozone will register an expansion of 3.6%, after a fall of 7.4% in 2020, while Japan will grow only 2.5% in 2021 after a contraction of 5.3% in 2020.
Economic activity will be slightly more robust in emerging markets and developing economies.
The World Bank expects these countries to grow by 5% this year, mainly thanks to China, which will grow by 7.9% after a 2.6% contraction in 2020.
Debt crisis
Inequality in the face of this crisis is “dramatic” and has led to a “devastating rise in extreme poverty,” World Bank President David Malpass lamented during a news conference on Tuesday.
“People at the bottom of the income scale have been hardest hit” by the recession and “are likely to be the last to find work, get medical care, get vaccinated and adapt to the economy “Post Covid, he added.
“The pandemic has plunged millions into poverty,” the agency said in its report, urging governments to initiate reforms and mass investment programs to improve health services, education and digital infrastructure.
“The slowdown in global growth projected for the next decade is likely to worsen due to lack of investment, underemployment and declining labor force in many advanced economies,” he warns.
And while the World Bank has frequently expressed concern about the debt accumulation of developing countries and emerging economies, this time it is observed that the pandemic has greatly exacerbated its debt risks and the slowdown. growth.
This further increases the weight of debt and undermines the ability of debtor countries to honor it.
“The global community needs to act swiftly and resolutely to ensure that the recent accumulation of debt does not result in a series of debt crises,” warns Ayhan Kose, head of the Fair Growth, Finance and Institutions division, quoted in a press release.
“The developing world cannot afford another lost decade.”