World Bank says global economy to shrink by 5.2% in 2020 due to pandemic

The coronavirus outbreak has shut down many parts of the world with the economy pushed towards a standstill forcing businesses to contract. The World Bank on June 8 in its latest Global Economic Prospects report forecasted that the global GDP in 2020 will shrink by 5.2 per cent calling it the worst recession since World War II. According to the World Bank forecast, the advanced economies will contract by 7 per cent, while the emerging and developing will record a 2.5 per cent decline. The World Bank said that most countries are expected to face a recession in 2020. 

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"Every region is subject to substantial growth downgrades. East Asia and the Pacific will grow by a scant 0.5%. South Asia will contract by 2.7%, Sub-Saharan Africa by 2.8%, Middle East, and North Africa by 4.2%, Europe and Central Asia by 4.7%, and Latin America by 7.2%.  These downturns are expected to reverse years of progress toward development goals and tip tens of millions of people back into extreme poverty," the World Bank said in its report. 

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According to the report, per capita incomes are estimated to fall by 3.6 per cent due to the COVID-19 recession, pushing millions into extreme poverty. The global recession is expected to take the hardest toll on emerging and developing economies like India, where the informal sector accounts for 70% of total employment. The pandemic has already brought recession in countries like Japan, Australia, and the United States, where millions of people have filed for the unemployment claims in the past two months. 

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'Global community must unite'

"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," said Ceyla Pazarbasioglu, the World Bank Group’s Vice President for Equitable Growth, Finance, and Institutions.

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