A man wears a protective mask as he shops for groceries at Bakan Gizo supermarket, amid the coronavirus disease (COVID-19) outbreak, in Abuja, Nigeria June 11, 2020. (Reuters)
Global economy is expected to shrink by 5.2 percent in 2020, as the massive shock of the COVID-19 outbreak and shutdown measures to contain the pandemic have plunged the global economy into a severe contraction, according to the World Bank's global economic prospects report released on Thursday.
According to the report, between 71 million and 100 million people will be pushed into extreme poverty globally.
On Egypt, the report downgraded its expectations for the country’s real GDP growth to three percent in 2020, down from 5.8 percent projected in January, and to 2.1 percent in 2021, down from by six percent.
As a result of the pandemic and oil market developments, GDP in the MENA region is expected to contract sharply by 4.2 percent in 2020, although there is substantial uncertainty around this projection, according to the report.
Economic activity in MENA is expected to contract by more than four percent in 2020, as consumption, exports, and services, such as tourism, are severely disrupted by the pandemic. In oil exporting countries, exports and fiscal revenues will sharply fall with the plunge in oil prices, the report said.
Yet, regional growth is expected to resume in 2021 as the impact of the pandemic subsides and investment improves.
“Risks to the outlook are heavily tilted to the downside and include much more widespread regional COVID-19 outbreaks, prolonged weakness in oil prices and global activity, and intensification of regional conflicts,” the report added.
“The forecasts have been further downward revised from those in January and April and reflect continued deterioration of the outlook in the global economy recently."
The report said emerging markets and developing economies (EMDEs) are forecast to contract in 2020 due to the COVID-19 pandemic.
The impact is expected to be most severe for EMDEs with large domestic outbreaks and those that rely heavily on global trade, tourism, commodity exports, and external financing, according to the report.
Per capita incomes are projected to contract deeply as well, causing the first net rise in global poverty in more than 20 years, the report expected.
Growth in EMDEs, according to the report, is projected to pick up in 2021 on the back of firming trade and investment as the effects of the pandemic wane.
Meanwhile, prospects for subdued commodity prices are expected to temper the recovery in commodity exporters, the report stated.
For the EMDEs outlook, the report expected their activity to contract by 2.5 percent in 2020, 6.6 percentage points below previous forecasts, and the worst rate since at least 1960, the earliest year when aggregate GDP data is available.
The projected fall in activity is broad-based, with nearly 80 percent of EMDEs expected to register negative growth in 2020, according to the report.
Growth in EMDEs is projected to rebound in 2021, to 4.6 percent, supported by the expected pick-up in China and a recovery of trade flows and investment, continued the report.
Excluding China, EMDEs' growth is envisioned to recover at a more modest pace in 2031, reflecting headwinds for commodity exporters amid subdued commodity prices and a weak rebound in services, according to the report.
“Economies dependent on tourism will be subject to an additional drag on growth. Through its effect on investment, as well as the loss of human capital among idled and furloughed workers, COVID-19 is likely to dampen long-term growth prospects and productivity."