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World Bank projects 5.6% growth for global economy

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World Bank projects 5.6% growth for global economy

By Folasade Akpan

The global economy is expected to grow 5.6% in 2021, although many emerging markets and developing economies continue to grapple with the COVID-19 pandemic and its aftermath.

The World Bank said so in its June World Economic Outlook released in Washington DC on Tuesday, adding that expected growth was largely based on strong rebounds in a few large economies.

The expected growth of 5.6%, the fastest post-recession pace in 80 years, is an upward revision from the 4.1% forecast in January.

According to the bank, despite the recovery, global production will be around 2% lower than pre-pandemic projections by the end of the year.

In addition, per capita income losses would not be offset by 2022 for around two-thirds of emerging countries and developing economies.

He said that among low-income economies, where immunization had fallen behind, the effects of the pandemic had reversed gains in poverty reduction and compounded insecurity and other long-standing challenges.

Among large economies, growth in the United States of America is expected to reach 6.8%, reflecting large-scale budget support and the easing of restrictions linked to the pandemic, while growth in other advanced economies is expected to rise. also firms, but to a lesser extent.

“Among emerging markets and developing economies, China is expected to rebound to 8.5% this year, reflecting the release of pent-up demand.

“Emerging and developing market economies as a group are expected to grow 6% this year, supported by higher demand and high commodity prices. “

He said, however, that the recovery in many countries was being held back by a resurgence of COVID-19 cases and late progress in vaccination, as well as the withdrawal of political support in some cases.

He said that excluding China, the rebound in this group of countries is expected to be more modest at 4.4%, while the recovery among emerging markets and developing economies is expected to moderate to 4.7. % in 2022.

Even so, the gains in this group of economies are not enough to recoup losses suffered during the 2020 recession, and production in 2022 is expected to be 4.1% lower than projections before the pandemic, ”a- he declared.

He added that per capita income in many emerging markets and developing economies is also expected to remain below pre-pandemic levels and the losses are expected to worsen deprivations associated with health, education and living standards. .

The main engines of growth were expected to lose momentum even before the COVID-19 crisis, and the trend is likely to be amplified by the healing effects of the pandemic.

“Growth in low-income economies this year is expected to be the slowest in the past 20 years, other than 2020, partly reflecting the very slow pace of immunization.

“Low-income economies are expected to grow 2.9% in 2021 before recovering to 4.7% in 2022.

“The group’s production level in 2022 is expected to be 4.9% lower than pre-pandemic projections.”

For sub-Saharan Africa, regional activity is expected to increase by 2.8% in 2021 and 3.3% in 2022.

The positive fallout from increased global activity, better international control of COVID-19, and strong domestic activity by agricultural commodity exporters are expected to gradually help boost growth, the report said.

“Nonetheless, the recovery is expected to remain fragile, given the legacy of the pandemic and the slowness of vaccinations in the region.

“In a region where tens of millions more are estimated to have fallen into extreme poverty as a result of COVID-19.

“Per capita income growth is expected to remain low, averaging 0.4% per year in 2021-2022, reversing only a small part of last year’s loss.

“Risks to the outlook are on the downside and include persistent supplies and logistical barriers to immunizations, further increases in food prices that could worsen food insecurity, increasing internal tensions and conflicts and Longer-term damage deeper than expected from the pandemic. “

In Nigeria, however, growth is expected to pick up at a modest rate of 1.8% in 2021 and reach 2.1% in 2022, assuming higher oil prices, gradual implementation of structural reforms in the oil sector. and a market-based diet. flexible management of exchange rates.

“The expected recovery is also based on the continuation of vaccinations in the second half of 2021 and a gradual relaxation of restrictions linked to COVID which will allow activity to improve.

“Nevertheless, production in Nigeria is not expected to return to its 2019 level until the end of 2022.”

David Malpass, President of the World Bank Group, said that while there were encouraging signs of a global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.

He said coordinated global efforts were essential to accelerate vaccine distribution and debt relief, especially for low-income countries.

“As the health crisis eases, policymakers will need to address the lasting effects of the pandemic and take action to stimulate green, resilient and inclusive growth while preserving macroeconomic stability. “

The report says reducing trade costs such as cumbersome logistics and border procedures could help strengthen recovery among emerging and developing economies by facilitating trade.

Indermit Gill, vice president of the World Bank Group for Fair Growth and Financial Institutions, said linkages through trade and global value chains have been a key driver of economic progress for developing economies and had lifted many people out of poverty.

He said, however, that given current trends, global trade growth is expected to slow over the next decade.

“As developing economies recover from the COVID-19 pandemic, reducing trade costs can create an enabling environment for re-engagement in global supply chains and restarting trade growth. “

He also said that rising food prices and accelerating headline inflation could also exacerbate problems related to food insecurity in low-income countries.

However, policymakers in these countries should ensure that rising inflation rates do not undermine inflation expectations and resist subsidies or price controls to avoid exerting upward pressure. on world food prices.

Instead, policies focused on scaling up social safety net programs, improving the logistics and climate resilience of the local food supply would be more helpful, he added. (NAA)

(NAN)

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