Global economy expected to expand by 4% in 2021, recovery to be subdued: WB
The World Bank has said in its semi-annual Global Economic Prospects report. Output will likely expand 4% in 2021, down from a 4.2% the Bank had forecast in its June report, before slowing to 3.8% in 2022.
That’s the optimistic scenario. What do they have for the bears? An “exceptional level of uncertainty” caused by the trajectory of the pandemic and the global vaccine rollout mean that growth could come in at just 1.6%. “In a more severe downside scenario including widespread financial stress, global growth could even be negative in 2021,” it said.
After 2020 any growth is welcome — but the threat of a “lost decade” is real: Ayhan Kose, the bank’s acting vice president for equitable growth and financial institutions, told the Wall Street Journal that the actions of policymakers in the months ahead will shape the decade to come. “If history is any guide, unless there is substantial reform, we think the global economy is headed for a decade of disappointing growth outcomes,” he said. “The world can’t wait for everyone to be vaccinated to inoculate the global economy against another lost decade for growth … that means policy makers need to act and act aggressively to get ahead of the pandemic.”
For Egypt, the report predicts economic growth to slow down to 2.7 percent in FY2020/2021, down from 3.6 percent in 2020, and to bounce back to 5.8 percent in 2022.
The report attributed the economic growth contraction in FY20202021 to the collapse in tourism, gas extractives and a slowdown in other key sectors such as manufacturing.
The economy has avoided sliding into contraction thanks to reforms, solid policy buffers, “resilient” consumption patterns, international help, and mega-projects, but nonetheless has been “heavily disrupted” by covid-19. The collapse in tourism, natural gas extractives, and manufacturing dampened growth which will remain subdued until FY2021-2022 when the bank forecasts a return to pre-pandemic growth levels of 5.8%.
