Global economy projected to grow by 4 %-World Bank

Although the global economy is emerging from the collapse triggered by the pandemic, its recovery is projected to be subdued. According to the World Bank, global economic output is expected to expand four per cent in 2021, but still remains more than five per cent below its pre-pandemic trend. Notwithstanding, the bank said there is a material risk that setbacks in containing the pandemic or other adverse events derail the recovery. It said that growth in emerging market and developing economies (EMDEs) is envisioned to firm to five per cent in 2021, but EMDE output is also expected to remain well below its pre-pandemic projection.

The pandemic has exacerbated the risks associated with a decade-long wave of global debt accumulation. Debt levels have reached historic highs, making the global economy particularly vulnerable to financial market stress. The bank said the pandemic was likely to deepen the long-expected slowdown in potential growth over the next decade, undermining prospects for poverty reduction. The heightened level of uncertainty around the global outlook highlights policy makers’ role in raising the likelihood of better growth outcomes while warding off worse ones. Limiting the spread of the virus, providing relief for vulnerable populations, and overcoming vaccine-related challenges are key immediate priorities.  With weak fiscal positions severely constraining government support measures in many countries, an emphasis on ambitious reforms is needed to rekindle robust, sustainable and equitable growth. Global cooperation is critical in addressing many of these challenges.