World Bank sees subdued recovery and plenty of risk

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 for growth is highly uncertain and imperiled by increasing coronavirus infections and delays in the rollout of vaccines.

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 policy makers 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. For 2020, the World Bank expects GDP in the United States to fall by 4.3% while it predicted a modest 2% increase in China.

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.