A recovery from COVID-19's ravaging of the global economy will likely be subdued if policymakers can't get a handle on the pandemic and implement investment-enhancing reforms, the World Bank said Jan. 5.
The World Bank projects the global economy will expand 4 percent in 2021 after contracting 4.3 percent last year, assuming that vaccine distribution becomes widespread throughout the year. Policymakers top immediate priorities should be controlling the pandemic's spread and ensuring rapid vaccine distribution, the bank said.
If vaccine distribution stalls and infection counts continue to rise, however, economic growth could be limited to 1.6 percent this year.
Even if policy makers can get a handle on the pandemic and implement good investment policy, the bank expects the global economy's wounds from COVID-19 to show for the next decade. Global growth will likely stall in light of underinvestment, underemployment and labor force declines in advanced economies, the bank said. In light of this prediction, the World Bank lowered its annual global economic growth projection from 2.1 percent to 1.9 percent. Over the past decade, this figure sat at 2.5 percent, according to The Wall Street Journal.
To support a global economic recovery, policymakers should focus on shoring up organic growth. Developing economies and emerging markets should move to improve health, education, climate resilience and other infrastructure to mitigate COVID-19's long-term economic damage.
"The global community needs to act rapidly and forcefully to make sure the recent debt accumulation does not end with a string of debt crises," Ayhan Kose, PhD, the World Bank's acting vice president for equitable growth and financial institutions, said in a news release. "The developing world cannot afford another lost decade."