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The following is the January 2021 global economic outlook report From World Bank recommended by recordtrend.com. And this article belongs to the classification: global economy , research report.
According to the global economic outlook released by the world bank today, if large-scale promotion of new coronavirus vaccination can be implemented in 2021, the global economy is expected to grow by 4% this year. However, if policy makers do not take decisive measures to curb the spread of the epidemic and implement reforms to promote investment, the recovery may be slow and weak.
In emerging markets and developing economies, including China, gross domestic product is expected to grow by 5% in 2021 after shrinking by 2.6% in 2020, but China is expected to grow by 7.9%, the report said.
Vaccine deployment and investment are crucial
Although the global economy will shrink by 4.3% in 2020 and then resume growth, the new coronavirus epidemic may inhibit economic activity and income growth for a long time, the report said. The primary policy focus in the short term is to control the spread of the epidemic and ensure rapid and widespread deployment of vaccines. To support economic recovery, governments also need to promote a reinvestment cycle aimed at achieving sustainable growth that relies less on government debt.
The report shows that the near-term outlook is still highly uncertain. Under the pessimistic scenario, the infection rate continues to rise and the vaccine is delayed, which may limit the global growth to 1.6% in 2021. At the same time, under the optimistic scenario, the epidemic situation is under control, the vaccination process is accelerated, and the global growth may accelerate to nearly 5%.
In developed economies, the rebound that just appeared in the third quarter after the infection rate rebounded stalled, indicating that the recovery process is slow and challenging.
According to the latest issue of global economic outlook, the epidemic is expected to have a long-term adverse impact on global activities. Due to underinvestment, underemployment and declining labor force in many developed economies, it is likely to further aggravate the expected slowdown of global economic growth in the next decade. If we take history as a mirror, if policy makers do not implement comprehensive reforms to enhance the basic drivers of equitable and sustainable economic growth, then the global economy will face a decade of disappointing growth rates.
The report calls on policy makers to maintain the recovery momentum and gradually shift from income support to growth promoting policies. In the long run, in emerging markets and developing economies, policies aimed at improving health and education services, digital infrastructure, climate resilience and business and governance practices will help to reduce economic losses caused by the epidemic, reduce poverty and promote common prosperity. In the context of weak fiscal position and increased debt, institutional reform aimed at stimulating organic growth is particularly important.
For the first time in many cases, central banks in some emerging markets and developing economies have used asset purchase schemes to cope with financial market pressures from the epidemic. In response to market failures, these plans seem to help stabilize financial markets in the early stages of the crisis. However, in those economies that continue to expand asset acquisitions and see them as financing fiscal deficits, these plans may weaken the operational independence of the central bank, run the risk of losing the anchor of inflation expectations due to currency weakness, and increase concerns about debt sustainability.
Prospects for East Asia and the Pacific
Driven by the rebound of China’s economy, economic growth in the region is expected to accelerate to 7.4% in 2021. The premise is that in the first quarter of 2021, effective vaccination will be carried out successively in major economies, small emerging markets and developing economies. Nevertheless, the level of economic activity in the region is expected to remain below the pre epidemic trend in the second half of 2021, reflecting the persistent damage caused by the new epidemic. Investment and productivity are expected to remain in the doldrums, and uncertainty is likely to remain high.
China’s economic growth is expected to climb to 7.9% in 2021, reflecting a faster than expected release of pent up demand and recovery of production and exports. In other economies in the region, despite significant differences between countries, growth will be more delayed, and output is expected to remain 7.5% below pre epidemic forecasts by 2022.
In addition, more countries in the region are likely to encounter difficulties in procurement and distribution than currently expected. Although the region has a relatively strong monetary and fiscal policy framework at the time of the outbreak, it is expected that most countries will face serious deterioration in their fiscal situation and increased debt.
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