Global Economy Record To Decline By 5.2%
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An automobile factory in Germany |
According to the World
Economic Outlook for June 2020 of the World Bank (WB), the global economy will
seriously decline at 5.2% this year due to the shock of the Covid-19 epidemic,
especially as a result of measures to close the economy to prevent the spread
of a pandemic.
This forecast means that
this will be the worst economic recession since World War II. The World
Bank report also forecasts that economic activity of developed economies will
decrease by 7% by 2020 due to serious disruptions in domestic supply, demand
and trade.
Developing economies and emerging markets (EMDE) are expected
to decline by 2.5% this year, the group's first decline in at least 60 years.
Per capital income is
expected to fall by 3.6% and this will leave millions in extreme poverty this
year. The countries with the most severe pandemics and those heavily
dependent on global trade, tourism, export of goods and external finance will
be hardest hit. Although the degree of disruption will vary from region to
region, all EMDEs are vulnerable and this vulnerability will be even more
severe due to external shocks.
It is predicted that when
the pandemic is repulsed and domestic restrictions are lifted in developed
economies and then in all EMDE, the global negative impact will be reduced and
the chaos in the market will be reduced. Financial school does not last long,
global growth is forecast to rise back to 4.2% by 2021 when developed economies
grow by 3.9% and EMDE rebounds by 4.6%.
However, the outlook is uncertain
because of the risks, including the possibility of a longer pandemic, financial
volatility and global paralysis of trade and supply links. This reverse
scenario could lead to a global economic decline of up to 8% this year, along
with EMDE's output falling by nearly 5%, followed by a slow recovery of 1% in
2021.
The World Bank report is
evidence that the world economy is still facing great challenges even when
countries start to resume part of their economic activities after months of
closure due to epidemics. In the US, the center of the world's Covid-19
epidemic, the economy is expected to decline by 6.1% this year.
According
to the US National Bureau of Economic Research (NBER), negative signs of the US
economy have ended the longest period of growth in the country's history since
1854. Meanwhile, the growth of Eurozone is forecast to decrease 9.1%.
However, the report also
stressed that Asia can play a leading role in economic recovery after the
epidemic. Asian economies face disease earlier than the United States and
Europe, so the theory can soon overcome the crisis due to the success of
quarantine and quarantine measures. Growth in GDP of ASEAN countries is
expected to reach 8% by 2021 after falling into recession in the first half of
2020.
Meanwhile, India will grow by a negative 3.2%. in the current fiscal, the
lowest level since 1979.
Experts said that in the
coming months, many countries may apply additional stimulus measures to help
revive the economy buckling the impact of the disease. Increasing worker
benefits and capital support for businesses are short-term proposals that can
be considered for implementation.
In the long run, the gloomy growth
prospects are likely to force governments to implement comprehensive reform
programs to minimize the impact of the pandemic.
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