The global economy, which has jumped into a critical contraction, will drop by 5.2% this year due to the massive shock of the coronavirus pandemic and the stoppage measures to contain it, the World Bank issues statement. World Bank President said that “since 1870, the coronavirus recession is the first and to be triggered solely in a pandemic”.
As per the report, economic activity among modern economies is expected to fall by 7% in 2020. Emerging Markets and Developing Economies are predicted to fall by 2.5% this year. Also, per capita income is anticipated to drop by 3.6%, which will tip numbers of people into poverty this year.
According to World Bank, World will face challenges like-
- long-lasting socio-economic impacts
- long-term growth prospects
- fall in investment
- the loss of human capital
- rifts of supply and trade linkages
The speed and strength of the recovery will depend on the effectiveness of the help programmes by government and the international community put in place now and on what policymakers do to respond to the new environment. According to the report, the global economy has already experienced 14 global recessions since 1870 and last five were in 1975, 1982, 1991, 2009 and 2020. This report reveals that global community is facing a recession in One Decade.
The current plans suggest that the coronavirus stagnation will involve a decline in world per capita Gross Domestic Product (GDP) by 6.2%, making it the deepest global recession since 1945-46. Current predictions suggest that in 2020, the highest share of economies will experience reductions in annual per capita GDP since 1870.
The depth and speed with which it has struck, suggests the probability of a slow recovery that may require policymakers to consider additional interventions. For many evolving markets and developing countries, however, effective financial support and alleviation measures are difficult to achieve because a substantial share of employment is in informal sectors. On the other hand, magnitude of the disruption will vary from region to region; all EMDEs have vulnerabilities that are magnified by external shocks. Banks said that, the interruptions in schooling and primary healthcare access are more likely to have lasting impacts on human capital development.
The blow is hitting hardest in nations where there is heavy trust on, like-
- world trade
- commodity exports
- external financing
Steps that will be effective in dealing with this pandemic-
- Addressing the world economic and health emergency
- the global community must find ways to shield more people from falling into unemployment and poverty
- policymakers should be ready to employ additional measures to succor activity
World Bank suggested that the COVID-19 recession is to be the deepest one in today’s economies since the World War-II and the first output contraction in evolving and developing economies in at least the past six decades. The current episode has already seen by distant the fastest and steepest downgrades in global growth forecasts and there may be more growth downgrades in store.
In recession the share of economies will be more than 90% even higher than the proportion of about 85% of countries. In recent updates, the coronavirus has infected over 70,00,000 people and killed more than 4,00,000 across the world. The United States is the worst affected nation with more than 1.9 million cases with 1,10,000 deaths.