Global economic GDP is forecast to shrink by 4.3 percent by the end of 2020, while advanced economies are expected to remain well below the pre-crisis trend in 2021 despite the unprecedented monetary and fiscal stimulus applied to contain COVID-19’s severe repercussions, according to the European Investment Bank.
These forecasts were announced during the annual press conference held by the European Investment Group, the European Investment Bank (EIB) and the European Investment Fund (EIF), on Wednesday, attended by Ahram Online, to announce the group’s activity results in 2020 and its outlook for 2021.
Outside the European Union (EU), GDP is projected to shrink by 3.8 percent in 2020 followed by a rebound of 4.7 percent in 2021, according to the EIB’s estimates.
For the Middle East and Central Asia as well as emerging and developing Europe, GDP is projected to contract by 4 to 5 percent in 2020, followed by a rebound that ranges between 3 percent and 4 percent in 2021, according to the EIB.
During 2020, the European Investment Group signed financing agreements with a total of €76.8 billion, €66.6 billion of which were in the EU and €10.2 billion outside the EU, EIB President Werner Hoyer said.
Hoyer also noted that the total EIB financing signed in 2020 amounted to 66.09 billion, while total EIF’s signed financing recorded €12.87 billion.
He added that total investment supported by the EIB in 2020 was worth €270 billion, while green financing (climate action and environmental sustainability financing by the EIB) accounted for 40 percent of total financing.
On raising money in the capital markets, EIB allocated €70 billion for borrowing in 2020, 2 percent of which were extended to the Middle East and North Africa region, according to Hoyer.
For its operational plan in 2021 outside the EU countries, EIB targets levels similar to the current, focused on supporting COVID-19 crisis response measures in developing countries, including short and medium-term support
for the healthcare sector, small and medium-sized enterprises (SMEs) financing and investments, catalysing economic recovery, as well as continuing to finance the fight against climate change, according to Hoyer.
He also added that EIB is committed to the “Team Europe” initiative and support projects that will help to address the COVID-19 health crisis and contribute to building health preparedness and economic resilience.
For Africa, EIB will focus on private sector development and improved access to finance for SMEs with the aim of creating new jobs and growth in the region, while supporting enabling infrastructure that helps people’s lives and backs the sustainable development goals (SDGs).
In this regard, Hoyer said that Investment outside the EU, and in Africa in particular, is challenging due to the political instability, security problems, the rising debt vulnerabilities of many sovereigns, weak technical capabilities among partners, and gaps in regulatory frameworks.
“All of these factors can raise the risk level of operations, particularly those in support of the private sector, and can make project implementation challenging”, he added.