Covid-19

And The Global Economy

The latest edition of the Global Economic Prospect report released by the World Bank yesterday highlights the following:

1.  The COVID-19 recession is the first since 1870 to be triggered solely by a pandemic.

2.  For many emerging markets and developing countries, however, effective financial support and mitigation measures are particularly hard to achieve because a substantial share of employment is in informal sectors.

3. Economic activity among advanced economies is anticipated to shrink by seven per cent in 2020 as domestic demand and supply, trade and finance have been severely disrupted.

4. Emerging Markets and Developing Economies (EMDEs) are expected to shrink by 2.5 per cent this year, their first contraction as a group in at least 60 years.

5. Per capita incomes are expected to decline by 3.6 per cent, which will tip millions of people into extreme poverty this year.

6. The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports and external financing.

7. While the magnitude of the disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.

8. The global economy has experienced 14 global recessions since 1870: in 1876, 1885, 1893, 1908, 1914, 1917-21, 1930-32, 1938, 1945-46, 1975, 1982, 1991, 2009 and 2020.

9. The current projections suggest that the COVID-19 recession will involve a decline in global per capita Gross Domestic Product (GDP) by 6.2 per cent, making it the deepest global recession since 1945-46, and more than twice as deep as the recession associated with the global financial crisis.

10. Current forecasts suggest that in 2020, the highest share of economies will experience contractions in annual per capita GDP since 1870.

11. The share of economies in recession will be more than 90 per cent, even higher than the proportion of about 85 per cent of countries in recession at the height of the Great Depression of 1930-32.