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The COVID-19 pandemic will shrink the global economy by 5.2 per cent this year, representing the deepest recession since World War Two, and triggering a dramatic rise in extreme poverty, the World Bank said Monday in its latest Global Economic Prospects report.
Emerging market and developing economies are due to shrink by 2.5 per cent – their first contraction as a group in at least 60 years. Per capita incomes, meanwhile, are forecast to fall by 3.6 per cent – tipping millions into extreme poverty.
Per-capita output will contract in more than 90% of countries, the biggest share since 1870. This decline may push 70 million to 100 million people into extreme poverty, Ceyla Pazarbazioglu, the World Bank’s vice president of equitable growth, finance and institutions, told reporters by phone.
Emerging and developing economies will shrink 2.5%, their worst performance in data that starts in 1960, it said.
Growth in the region is projected to fall to 0.5% in 2020, the lowest rate since 1967
The East Asia and Pacific regional economy has been affected by the COVID-19 pandemic through both domestic and external channels.
Growth in the region is projected to fall to 0.5% in 2020, the lowest rate since 1967, reflecting disruptions caused by the pandemic. China is expected to slow to 1% this year and rebound to 6.9 percent in 2021 as activity gradually normalizes there and as lockdowns are lifted around the world.
The outlook is predicated on China and other major countries in the region avoiding a second wave of outbreaks. The assumption is that the severe slowdown in China in the first quarter and the rest of the region in the first half will be followed by a gradual and sustained recovery.
Thailand (-5%) and Malaysia (-3.1%) are forecast to experience the biggest contractions this year
Economic activity in the rest of East Asia and Pacific is forecast to contract by 1.2% in 2020 before rebounding to 5.4% in 2021.
Among major economies of the region, Malaysia (-3.1%), the Philippines (-1.9%), and Thailand (-5%) are forecast to experience the biggest contractions this year. This reflects domestic shutdowns, reduced tourism, disrupted trade and manufacturing, and spillovers from financial markets.
Indonesia’s economic activity is anticipated to be flat in 2020 while Vietnam’s growth is forecast to slow to 2.8%. While not contractions, these growth rates would nevertheless be 5.1 percentage points and 3.7 percentage points lower than January forecasts.