World Bank on Tuesday raised its global growth forecast to 5.6 per cent for 2021, predicting that the fastest impending economic rebound in 50 years for the pandemic-devasted planet would be accelerated by vaccinations and massive government stimulus in rich countries.
WB cited the huge US stimulus spending and faster growth in China as reasons for its upbeat projections.
The projected global expansion would make 2021 the fastest year of growth since 1973’s 6.6 per cent, the bank said.
The report noted that 90 per cent of advanced economies are expected to return to pre-pandemic levels next year — measured by income per person — versus just a third of developing countries.
Vaccines have become much more widely distributed in the United States and some other wealthy countries, boosting their output, as forecasts lag for emerging market and low-income countries.
By 2022, this will leave global output about 2.0 per cent below pre-pandemic projections and about two-thirds of emerging market economies will still not have made up last year’s per-capita income losses.
World Bank said in its January 2021 Global Economic Prospects that the global economy was on track to expand 4.1 per cent in 2021, assuming an initial vaccine rollout becomes widespread throughout the year.
Besides, US and China, the 19 European countries that share the euro currency are collectively expected to 4.2 per cent, reversing last year’s 6.6 per cent drop. And Japan is forecast to post 2.9 per cent growth this year after registering a 4.7 per cent drop in economic output last year.
The World Bank report also noted risks associated with rising inflation pressures that will add about one percentage point to global inflation in 2021.
The report said market concerns about inflation could raise borrowing costs in emerging markets and low-income countries that are also more challenged by short-term inflation because of rising food costs.
(Based with edit version of issacjohn’s report@khaleejtimes)