World Bank Economic Outlook: The global economy is expected to grow 4% in 2021, or 7.9% in China
The world economy is expected to expand by 4% in 2021 after contracting 4.3% in 2020, the World Bank said on Tuesday. But the agency also warned that the rise in new-crown virus infections and delays in vaccine distribution could also make this year’s recovery only 1.6 percent.
The World Bank’s semi-annual Global Economic Outlook report shows that the new crown epidemic caused a slight decline in economic activity than previously estimated, but the recovery is also weaker, still facing a lot of downside risks.
“There is still a high degree of uncertainty about the immediate future ,” the Bank said in a statement. “In a situation where downside risks dominate, the number of infections continues to increase and vaccination delays may limit the global economic expansion to 1.6 per cent in 2021.”
The World Bank reports that global economic growth could accelerate to nearly 5% if the epidemic is successfully contained and the vaccination process accelerates.
The world bank said the outbreak is expected to have a long-term negative impact on the global economy, exacerbating the previously predicted slowdown before the outbreak, and the world could face “a decade-long underperformance of growth” unless comprehensive reforms are implemented.
The Bank said the milder recession in the advanced economies and stronger recovery in China helped to avoid a larger collapse in global output, but most other emerging and developing economies were more affected.
Emerging markets and developing economies, including China, are expected to grow by 5 of their gross domestic product (GDP) in 2021 and shrink 2.6% in 2020.
China’s economy is expected to expand by 7.9% this year and by 2% in 2020, the World Bank said.
Emerging and developing economies outside China are expected to grow 3.4 per cent in 2021 after contracting 5 per cent in 2020.
According to the World Bank ,90 per cent of emerging markets and developing economies have seen their per capita income decline, causing millions of people to return to poverty, while declining investor confidence, rising unemployment and a loss of education time will undermine prospects for future poverty reduction.
Also, the crisis triggered a sharp rise in debt levels in emerging markets and developing economies, with the ratio of government debt to gross domestic product (GDP) jumping nine percentage points, the largest annual increase since the late 1980s.
The resurgence of viral infections brought the nascent rebound in advanced economies to a halt in the third quarter. The Bank said the economies are expected to grow 3.3% in 2021, down from the original estimate of 3.9% in output.
America’s GDP is expected to expand 3.5% in 2021 and shrink 3.6% in 2020. Economic output in the euro zone is expected to grow 3.6% this year, down 7.4% in 2020, while Japan’s economy is expected to grow 2.5% this year after shrinking 5.3% last year.