World Bank sees subdued recovery in 2021, with pandemic ongoing
WASHINGTON – The global economy will experience a subdued recovery this year from the devastating pandemic, the World Bank predicted Tuesday, but it warned that the near-term outlook is highly uncertain and growth could be imperiled if coronavirus infections and delays in the rollout of vaccines continue.
In its new Global Economic Outlook, the World Bank forecast 4% growth this year following a 4.3% decline in 2020, the biggest plunge in global output since a contraction of 9.8% in 1945 as nations demobilized at the end of World War II.
By comparison, the global recession triggered by the Great Depression of the 1930s saw growth shrink by 4.8% on average from 1930 through 1932. The 2008 financial crisis triggered a 1.8% drop in global output in 2009.
“If history is any guide, the global economy is heading for a decade of growth disappointments unless policymakers put in place comprehensive reforms,” the bank warned, citing the global pandemic layered over economic trends already in play.
“While the global economy appears to have entered a subdued recovery, policymakers face formidable challenges in public health, debt management, budget policies, central banking and structural reforms,” said World Bank President David Malpass.
The bank said global growth will be aided by a recovery this year to GDP growth of 3.5% in the United States and an even bigger 7.9% rebound in China, the world's two biggest economies.
Because of the uncertainty caused by the current resurgence in virus cases and initial problems in distributing vaccines, the World Bank cautioned that its forecast is highly uncertain.
Under a scenario where virus cases continue to rise and the rollout of the vaccine does not accelerate, global growth could be reduced to a meager 1.6% this year.
The new report boosted global growth for 2020 by 0.9 percentage points from the June forecast, reflecting in part a better-than-expected performance in China and the United States. But the forecast trimmed the outlook for 2021 by 0.2 percentage points.