The global economy will shrink by 5.2% in 2020, according to World Bank (WB) forecasts.
In its June 2020 Global Economic Prospects, the WB says that the worldwide shrink would represent the deepest recession since World War II. It would also be the largest fraction of economies experiencing declines in per capita output since 1870.
“Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted,” the WB said. “Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in at least 60 years.”
The WB also said that per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year.
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. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.