The COVID-19 recession is the first since 1870 to be triggered solely by a pandemic, World Bank President David Malpass said in his foreword to the latest edition of the Global Economic Prospect report released on Monday.
“The speed and depth with which it has struck, suggests the possibility of a sluggish recovery that may require policymakers to consider additional interventions,” he said.
For many emerging markets and developing countries, however, effective financial support and mitigation measures are particularly hard to achieve because a substantial share of employment is in informal sectors, the president of the Washington-based multilateral lender said.
According to the report, economic activity among advanced economies is anticipated to shrink by seven percent in 2020 as domestic demand and supply, trade and finance have been severely disrupted.
Emerging Markets and Developing Economies (EMDEs) are expected to shrink by 2.5 percent this year, their first contraction as a group in at least 60 years, it said.
Per capita incomes are expected to decline by 3.6 percent, which will tip millions of people into extreme poverty this year, according to the report.
The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports and external financing, it said.
While the magnitude of the 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, the bank said.
The World Bank report said that the global economy has experienced 14 global recessions since 1870: in 1876, 1885, 1893, 1908, 1914, 1917-21, 1930-32, 1938, 1945-46, 1975, 1982, 1991, 2009 and 2020.
The current projections suggest that the COVID-19 recession will involve a decline in global per capita Gross Domestic Product (GDP) by 6.2 percent, making it the deepest global recession since 1945-46, and more than twice as deep as the recession associated with the global financial crisis, the report said.
Current forecasts suggest that in 2020, the highest share of economies will experience contractions in annual per capita GDP since 1870, it said.
The share of economies in recession will be more than 90 percent, even higher than the proportion of about 85 percent of countries in recession at the height of the Great Depression of 1930-32, it added.