Report

• Global Economic Prospects is a World Bank Group flagship report that examines global economic developments and prospects, with a special focus on emerging market and developing economies.

• It is issued twice a year, in January and June.

• The January edition includes in-depth analyses of topical policy challenges while the June edition contains shorter analytical pieces.

Context:

• In its Global Economic Prospects (GEP) June 2020 report, the World Bank said that the COVID-19 pandemic is expected to have severe short and longterm effects on economic growth. Emerging Market and Developing Economies (EMDE)

• The report states that EMDEs are especially vulnerable.

• The report said EMDEs face health crises, restrictions and external shocks like falling trade, tourism and commodity prices, as well as capital outflows.

• These countries are expected to have a 3-8% output loss in the short-term, based on studies of previous pandemics, as per the Bank’s analysis.

• EMDEs are also expected to witness the spill-over effects of the U.S., the Euro Area and China, which represent almost half of global output, being unlikely to return to pre-pandemic levels of output before the end of 2021.

• If these three big economies simultaneously lose 1% in output, EMDEs (excluding China) are expected to lose 1.3% in their output with the lag of a year, the Bank warned.

• Longer term, there is a risk not just of a drop in the level of output but a lowering of potential output growth, it said. On policy choices

• Including greater debt transparency to invite new investment

• Faster advances in digital connectivity

• A major expansion of cash safety nets for the poor — will help limit the damage and build a stronger recovery. Worst recession since World War II

• The World Bank said the swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction.

• It said this would be the most synchronised contraction in per capita output for economies since 1870, estimating a 5.2% contraction in 2020 with a 4.2% rebound next year (2021).

• According to the report, 90% of economies would be in recession, higher than levels seen during the Great Depression of the 1930s. Impact on Poverty

• Sixty million people could be pushed into extreme poverty

• These estimates are likely to rise further On India

• The World Bank expects India’s economy to contract 3.2 percent in the current fiscal. It has cited stringent lockdown and spillover from weaker global growth