Per Capita Incomes to Shrink in All Regions as COVID-19 Health Crisis Crushes Economic Output
The World Bank has issued a statement that the massive shock of the COVID-19 crisis and affiliated lockdown have plunged the global economy into a severe contraction.
The World Bank predicts that the global economy sank by 5.2% this year and thus represents the deepest recession since the Second World War. Additionally, the largest fraction of economies experienced the largest declines in per capita output since 1870.
Economic activity among advanced economies is expected to decline by 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted.
Emerging market and developing economies (EMDEs) are anticipated to drop by 2.5% this year, their first contraction as a group in at least sixty years.
Per capita incomes are expected to decline by 3.6%. This decline is said to tip millions of people into extreme poverty this year.
The World Bank states that countries hit hardest by COVID and those depending largely on global trade, tourism, commodity exports and external financing have seen the most significant economic impact.
“While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development,” stated the World Bank.
Meanwhile, many economies are starting to re-open as the Coronavirus recedes. Some policymakers have raised concerns regarding a second wave of COVID-19 in the fall.