Global economic output is expected to increase this year but it is largely dependent on the success of a vaccine rollout, the World Bank has warned.
The lender forecast that global GDP will expand four per cent in 2021 but will remain well below pre-pandemic projections due to a surge in new cases.
The “heightened level of uncertainty” means that any delay to the rollout could risk more than halving 20201’s growth rate.
Since autumn there has been a slow uptick in the number of cases which has jumped since the discovery of a mutant strain, first discovered in the UK.
The World Bank warned that further downside risks, including the further resurgence of the virus and more severe effects on output would dent the recovery. This could trigger a wave of bankruptcies and banking balance sheets taking a further hit.
The multilateral lender has even warned that prolonged economic weakness could see governments unable to continue providing financial support, which has proved a lifeline for millions of businesses.
In Europe and Central Asia, regional GDP is estimated to have contracted 2.9 per cent in 2020 with nearly all economies in recession.
And the World Bank is forecasting just a moderate 3.3 per cent growth in 2021 as a resurgence in cases causes disruption to output.
“The outlook is predicated on the distribution of an effective vaccine in early in 2021 in advanced economies and major emerging market and developing economies,” it said.
There was widespread optimism at the end of 2020 as the Pfizer/Biontech and Oxford/Astrazeneca vaccines reported high efficacy rates, but the logistics of mass rollout have proved a barrier.
France has vaccinated just 350 people while Germany has been slow to obtain enough doses. In a Downing Street press conference, the Prime Minister announced 1.3m elderly and vulnerable people in the UK have been vaccinated.