(Bloomberg) – Emerging market and developing countries will continue to grapple with the COVID-19 pandemic and its aftermath, even as some large economies stimulate global growth after the fastest recession in 80 years, the World Bank said. .
Global gross domestic product will expand 5.6% this year, up from 4.1% forecast in January, the Washington-based development organization said in its biannual World Economic Outlook. The rally will be driven in large part by a 6.8% expansion in the United States and 8.5% in China. The World Bank revised its historical data to reflect updated GDP weights.
Although most advanced countries are projected to return to their pre-pandemic per capita income levels in 2022, two-thirds of emerging and developing nations are projected to remain below that level. Growth in low-income countries is expected to be the second-slowest in 20 years, at 2.9%, down from 3.4% expected in January, held back by a lack of access to vaccines.
“It’s the story of two recoveries,” Ayhan Kose, director of the World Bank’s Development Outlook Analysis Group, said in an interview. “On the one hand, the advanced economies, the big countries, are generating rapid growth, record growth. On the other hand, we have these low-income countries struggling to generate growth ”.
The World Bank warned of significant uncertainty after 2021.
The global recovery could falter once policy aid is withdrawn and pent-up demand runs out, particularly if the pandemic persists, according to the report. “Unless the risks of having record debt levels are addressed, these economies remain vulnerable to financial market stress if investor confidence in the risks deteriorates due to inflation pressures in the economies. advanced, ”Kose said, according to the report.
In these circumstances, activity in both advanced and emerging and developing economies could decelerate global growth to 2.7% in 2022 and 2.1% in 2023. That would keep the recovery on par with the weak rebound that followed the global financial crisis of 2008 and 2009.
On the other hand, the global rebound could turn out stronger than expected if the surge in growth in 2021, coupled with faster and more equitable distribution of vaccines around the world, spurs expansion in the private sector.
To help ensure the best outcome, policymakers should seize the time of favorable global conditions to implement reforms that increase the resilience of financial systems, improve fiscal sustainability and create the foundations for an ecological, resilient and inclusive recovery, he said. the World Bank.
Original Note: World Bank Sees Strongest Rebound in 80 Years Despite Divergence
More stories like this are available on bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
© 2021 Bloomberg LP