The coronavirus pandemic will cause global economic output to contract by 5.2 per cent in 2020, the World Bank has said, as more than 90 per cent of the world’s economies have fallen into recession.
Advanced economies are expected to shrink seven per cent in 2020, the Bank said in its Global Economic Prospects report. Emerging market economies will contract 2.5 per cent, their first since aggregate data became available in 1960.
On a per-capita GDP basis, the world’s economic contraction will be the deepest since 1945-46 as spending during the Second World War dried up. The collapse in 2020 will be almost three times worse than the global recession after the 2008 financial crisis.
The World Bank said its scenarios were based on assumptions that social distancing and lockdown measures will begin to ease at the end of June.
The Eurozone is expected to contract by 9.1 per cent in 2020, while the US and Japan will post contractions of 6.1 per cent. Brazil’s economy will contract by eight per cent, and 3.2 per cent in India.
Meanwhile China is expected to maintain growth of one per cent in 2020, falling from a forecast in January of six per cent.
The updated forecasts from the World Bank show more damage to the economy than estimates released in April by the International Monetary Fund (IMF), which predicted a three per cent global contraction in 2020.
The IMF plans to update its forecasts on 24 June and managing director Kristalina Georgieva has said that further cuts are “very likely”.
Earlier this week World Bank president David Malpass said coronavirus would deal a “devastating blow” to the world economy, with the fallout from the pandemic to last up to a decade.