While economic growth rebounds strongly in 2021, it is expected to decline markedly from 5.5% last year to 4.1% in 2022 and to 3.2% in 2023.
Disruption and deceleration
Furthermore, a notable deceleration in major economies, including the United States and China, will have an impact on external demand in developing and emerging countries.
“The world economy is simultaneously facing COVID-19, inflation and policy uncertainty, with government spending and monetary policies in uncharted territory. Rising inequality and security challenges are particularly harmful to developing countries,” speak David Malpass, President of the World Bank Group.
“Getting more countries on a favorable growth path requires coordinated international action and a comprehensive set of national policy responses.”
The recession will coincide with a widening disparity in growth rates between advanced and emerging or developing economies.
Recessions in weak economies
The report says that by 2023, all advanced economies will achieve a full output recovery, but output in emerging and developing economies will remain 4% below trend. pre-pandemic direction.
The setback is even greater in fragile and conflict-affected economies, where output will be 7.5% below pre-pandemic trends. For small island states, this figure will be lower than 8.5%.
Meanwhile, rising inflation is constraining monetary policy, with low-income workers particularly hard hit. Inflation is at its highest level since 2008, both globally and in advanced economies, and has hit a decade high in emerging markets and developing economies.
Prioritizing vaccine equity
The report includes analyzes that outline three emerging obstacles to a sustained recovery in developing economies. It also includes the region’s growth prospects for the next two years.
Mari Pangestu, Executive Director for Development Policy and Partnerships at the World Bank, stressed the importance of multilateral cooperation as the choices policymakers make in the coming years will determine progress of the next decade.
“The immediate priority is to ensure that the vaccine is deployed more widely and equitably so that the pandemic can be brought under control. But addressing development reversals, such as rising inequality, will require long-term support. she speaks.
“In times of high debt, global cooperation will be essential to help expand the financial resources of developing economies so that they can achieve green, sustainable and inclusive development. “.