{"id":111785,"date":"2020-06-08T11:12:46","date_gmt":"2020-06-08T15:12:46","guid":{"rendered":"https:\/\/antiguanewsroom.com\/?p=111785"},"modified":"2020-06-08T11:12:46","modified_gmt":"2020-06-08T15:12:46","slug":"covid-19-to-plunge-global-economy-into-worst-recession-since-world-war-ii","status":"publish","type":"post","link":"https:\/\/antiguanewsroom.com\/covid-19-to-plunge-global-economy-into-worst-recession-since-world-war-ii\/","title":{"rendered":"COVID-19 to Plunge Global Economy into Worst Recession since World War II"},"content":{"rendered":"
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The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction. According to World Bank forecasts, the global economy will shrink by 5.2% this year.[1]<\/a>\u00a0That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank\u00a0says in its June 2020\u00a0Global Economic Prospects.<\/i><\/p>

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Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in at least sixty years. Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty\u00a0this year.<\/p>\n

The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing. While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks.\u00a0Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.<\/p>

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\u201cThis is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges,\u201d\u00a0<\/i>said\u00a0World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu.\u00a0<\/b>\u201cOur first order of business is to address the global health and economic emergency. Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment.\u201d<\/i><\/i><\/p>

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Under the baseline forecast\u2014which assumes that the pandemic recedes sufficiently to allow the lifting of domestic mitigation measures by mid-year in advanced economies and a bit later in EMDEs, that adverse global spillovers ease during the second half of the year, and that dislocations in financial markets are not long-lasting \u2014 global growth is forecast to rebound to 4.2% in 2021, as advanced economies grow 3.9% and EMDEs bounce back by 4.6%. However, the outlook is highly uncertain and downside risks are predominant, including the possibility of a more protracted pandemic, financial upheaval, and retreat from global trade and supply linkages. A downside scenario could lead the global economy to shrink by as much as 8% this year, followed by a sluggish recovery in 2021 of just over 1%, with output in EMDEs contracting by almost 5% this year.<\/p>\n

The U.S. economy is forecast to contract 6.1% this year, reflecting the disruptions associated with pandemic-control measures. Euro Area output is expected to shrink 9.1% in 2020 as widespread outbreaks took a heavy toll on activity. Japan\u2019s economy is anticipated to shrink 6.1% as preventive measures have slowed economic activity.<\/p>

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\u201cThe COVID-19 recession is singular in many respects and is likely to be the deepest one in advanced economies since\u00a0<\/i>the Second World War<\/i><\/a>\u00a0and the first output contraction in emerging and developing economies in at least the past six decades,\u201d<\/i>\u00a0said\u00a0World Bank Prospects Group Director Ayhan Kose<\/b>.\u00a0<\/i>\u201cThe current episode has already seen by far the fastest and steepest downgrades in global growth forecasts on record.<\/i>\u00a0If the past is any guide, there may be further growth downgrades in store, implying that policymakers may need to be ready to employ additional measures to support activity.\u201d<\/i><\/p>\n

Analytical sections in this edition of\u00a0Global Economic Prospects\u00a0<\/i>address key aspects of this historic economic shock:<\/p>

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