(11 January 2021 – Global) The COVID-19 pandemic is raising the prospect of a ‘lost 2020 decade’ the World Bank asserts.
The World Bank cut its growth forecast for 2021 to four percent following a sharp 4.3 percent contraction in 2020. Even preceding the coronavirus crisis, the World Bank lowered its projections for global growth in the ten years commencing from 2020. The Bank lowered its growth outlook further as the pandemic adversely disrupts trade, investment and education
The bank's latest January 2021 semi-annual Global Economic Prospects report attributes the long-term downgrade to depressed trade and investment sentiment caused by uncertainty over the pandemic, along with disruptions in education that will hamper gains in labour productivity.
Before the pandemic, the bank projected potential global growth between 2020 and 2029 would slow to per annum average of 2.1 percent, from 2.5 percent for the 2010, as a result of aging populations and lower productivity growth. Now the Bank has lowered its projection by two points to 1.9 percent.
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“If history is any guide, unless there is substantial reform, we think the global economy is headed for a decade of disappointing growth outcomes. Solvency risks currently concealed by low interest rates could surface in the next episode of financial stress or capital outflow” said World Bank acting VP for Equitable Growth and Financial Institutions, Ayhan Kose.
“The world can't wait for everyone to be vaccinated to inoculate the global economy against another lost decade for growth. That means policy makers need to act and act aggressively to get ahead of the pandemic” Mr Kose added.