Global Economy Will Plunge: Prepare for Recession

The global economy suffered a huge blow due to global pandemic, Covid-19 and the measures taken to counter and contain the virus. The economy has seen severe contraction and will shrink 5.2% in 2020 the World Bank said. In the latest edition of the Global Economic Prospect report released, David Malpass, President, World Bank said that this was the first time after 1870 that a pandemic alone has triggered a worldwide recession. He added that additional interventions may have to be taken by the policymakers in wake of the possibility of a sluggish recovery due to the speed and depth with which the virus has struck.

As the domestic demand and supply and trade and finances have been severely disrupted, the economic activity amongst the advanced economies is anticipated to shrink by 7% in 2020 according to the report. Emerging Markets and Developing Economies (EMDEs) are however expected to shrink by 2.5% this year, which will be their first contraction as a group in 60 years.

Ceyla Pazarbasioglu, Vice President for Equitable Growth, Finance and Institutions, World Bank Group said: "This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges".

Another issue that the world will face is of extreme poverty since the per capita incomes are expected to decline by 3.6%, which will eventually tip millions of people beyond the extreme poverty line. The countries that have the most severe impact of the virus and also has a heavy reliance on external financing, commodity exports, tourism, and global trade will be the hardest hit because of the virus.

There have been 14 global recessions since 1870: 1876, 1885, 1893, 1908, 1914, 1917-21, 1930-32, 1938, 1945-46, 1975, 1982, 1991, 2009, and 2020 said the World Bank report