COVID-19 impacts; Global economy to shrink by 5.2% this year

The global economy will shrink by 5.2% this year – marking the deepest recession since World War II, says the World Bank in its latest forecasts.

The Coronavirus pandemic and lockdown measures to contain it have embarked the global economy into a severe reduction.

The forecast indicates, “Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted.”

It also adds, “Emerging market and developing economies (EMDEs) are expected to shrink 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%, which will tip millions of people into extreme poverty this year.”

Countries where the pandemic has been the most severe and where there is a heavy reliance on global trade, tourism, commodity exports, and external financing, will be hit hard, according to the WB findings.

Because of the disrupted pandemic-control measures, the U.S. economy is forecasted to drop by 6.1% this year.

Also, the Euro Area is expected to shrink 9.1% in 2020 as widespread outbreaks took a heavy toll on activity.