Kovid-19 Aftermath Global Economy Could Call a ‘Lost Decade’ for the World Bank – tech2.org

Kovid-19 Aftermath Global Economy Could Call a ‘Lost Decade’ for the World Bank

WASHINGTON – Even before Kovid-19, the World Bank lowered its projections of global growth in the 10 years beginning in 2020. The epidemic is increasing the trend, which has increased the likelihood of a “lost decade”, the World Bank said on Tuesday, as it also cut its forecasts for the coming year.

The bank’s quasi-global Global Prospects report attributes the long-term decline to lower trade and investment due to uncertainty over the epidemic, along with disruptions in education that would hamper increased labor productivity.

“If there is no improvement in history, unless there is substantial improvement, we think the global economy is headed for disappointing growth results for over a decade,” said an interview. , Ayhan Kosay said.

Prior to the epidemic, the bank estimated that potential global growth between 2020 and 2029 would slow down from 2.5% to 2.1% annually over the last decade as a result of aging populations and lower productivity growth. On Tuesday, the bank reduced its projection to 1.9%. Potential production assumes that the world economy is operating at full employment and capacity.

The World Bank said the global economy is expected to grow 4% this year after contracting 4.3% in 2020. This 2021 launch is 0.2 percent lower than last June’s forecast, indicating a resurgence of coronovirus and renewal of restrictions on economic activity.

For emerging markets and developing countries, the World Bank is now seeing an average of 3.3% growth from 2020 to 2029, down from 4.0% before the epidemic and 5.0% during the last decade. The mission of the World Bank is to reduce poverty through loans and advice to developing countries.

“The world cannot wait for everyone to vaccinate the global economy against another lost decade for development,” Mr. Koss said. “This means that policy makers need to act and act aggressively to get ahead of the epidemic.”

He called for investments to improve technology, health care, education and the environment, as well as governance and debt transparency, particularly in emerging and developing economies.

Years of disappointing growth also followed the 2008 financial crisis. Global forecasts were repeatedly downgraded, with the average falling to 2.4% for a 10-year average in 2019 before the crisis saw 3.3% in 2019.

The downward revision for 2021 reflects slower growth in most advanced economies, with the US now projected to expand below 4% to 3.5% in the bank’s June forecast. The euro area is expected to grow 3.6%, down from 4.5%.

When coronoviruses worked through industry, commerce, and society in March 2020, the US economy declined. Top officials relied on the harsh decisions they had made to weather the storm. Photo Illustration: Adele Morgan / The Wall Street Journal

The emerging market economy is projected to grow 5% in 2021, up from 4.6% previously helped by China. The bank, China, which is the second largest economy in the world, will grow 7.9% this year after expanding 2% last year, when it was the only major economy to survive a contraction.

The 4.3% decline in the global economy last year was slightly less severe than before, mainly due to the shallow contraction in advanced economies supported by aggressive economies. The World Bank said China’s recovery also helped.

While advanced economies have been able to meet financial stimulus measures cheaply by taking advantage of low interest rates, emerging markets and developing economies are experiencing increasing debt risks, many of which were already reeling under heavy debt burdens before the epidemic. .

The World Bank said the rate of risk currently hidden by low interest rates could “surface in a sequel to financial stress or outflow of capital”.

Write Yuka Hayashi at [email protected]

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Printed as World Bank warnings of ‘Lost Decade’, printed on 6 January 2021.


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