Summary: The World Bank's Global Economic Prospects, released today, forecasts that the global economy will grow by 4% in 2021 if COVID-19 vaccines can be deployed on a large scale.
Foreign media reported on January 5: The World Bank's Global Economic Prospects, released today, forecasts that the global economy will grow by 4% this year if COVID-19 vaccines can be rolled out on a large scale in 2021. However, if policymakers do not take decisive measures to contain the pandemic and implement reforms to boost investment, the recovery could be slow and weak. The IMF also expects that most developed countries should begin to return to normal in the second half of this year as COVID-19 vaccination accelerates.
According to the report, global GDP is expected to resume growth in 2021 after contracting by 4.3% in 2020. The pandemic has pushed millions of people into poverty and may suppress economic activity and incomes for a prolonged period. To support economic recovery, the near-term priority for economies is to control the spread of the pandemic, ensure the rapid and broad deployment of vaccines, and carry out investment reforms aimed at achieving sustainable growth that relies less on government debt.
The World Bank noted that because developed economies contracted less severely and China's economic recovery was stronger than expected, the global economic collapse in 2020 was slightly less severe than previously estimated. It estimates that developed economies and emerging market and developing economies shrank by 5.4% and 2.6%, respectively, in 2020. Among them, the U.S. economy contracted by 3.6%, while China's economy is expected to grow by 2%. In 2021, developed economies and emerging market and developing economies are expected to grow by 3.3% and 5%, respectively, with the U.S. and eurozone economies expanding by 3.5% and 3.6%, respectively, and China's economy expected to grow by 7.9%.
The report also noted that the global economic outlook remains highly uncertain, with a range of possible outcomes. In an adverse scenario with persistently high infection rates and delayed vaccine rollout, global growth could be limited to 1.6% in 2021. However, if the pandemic is effectively controlled and vaccination accelerates, global growth could rise to nearly 5%.
World Bank President David Malpass said that although the global economy appears to be on a moderate recovery path, policymakers still face major challenges in public health, debt management, budget policy, central banking, and structural reforms to ensure the recovery gains momentum and lay the foundation for strong growth. He said that to overcome the impact of the pandemic and address investment risks, it is necessary to significantly improve the business environment, enhance labor and product market flexibility, and strengthen transparency and governance.
The International Monetary Fund (IMF) said that with the acceleration of COVID-19 vaccination, most developed countries should begin returning to normal in the second half of this year.
IMF Chief Economist Gita Gopinath said: "This is a very dark and difficult winter, but we do see light at the end of the tunnel. For the outlook, as of now, we are starting the year a little stronger than we anticipated for 2020, which is a good thing. But right now, it is a race between the virus and the vaccines." In its latest forecast released in October, the IMF said it expects global economic growth to rebound to 5.2% in 2021 after a 4.4% contraction in 2020. The U.S. is expected to grow by 3.1% in 2021, after contracting 4.3% in 2020. The IMF may update this outlook soon.
Despite the slow rollout of vaccines, Gopinath still hopes that most developed countries will be covered by this summer. Gopinath warned that the recovery will proceed at different speeds. Globally, she expects vaccine coverage to be comprehensive by the end of 2022.
She said: "Expectations are that vaccines and stimulus will deliver a recovery in the second half of the year."