Felix Richter:  What did World Bank report really say?

The quarterly World Bank, IMF and UNCTAD global outlook reports draw attention with their forecast summaries, but details are more important in guiding   our thought processes.  For instance, EM doesn’t make up for lost output due to Covid-19 in 2021, ex-China.  For instance, World Bank actually has a base case and a bad-case scenario, in the latter of which global economy only grows by 1.6%.  Felix Richter of the Wire notes another distressing detail:


The World Bank released its latest Global Economic Prospects report this week, providing us with an updated look at the coronavirus pandemic’s effect on the world economy. Striking a cautious tone, the report finds that global economic output will likely remain below its pre-pandemic trend for a protracted period, warning that the pandemic “has exacerbated the risks associated with a decade-long wave of global debt accumulation”.


While the World Bank’s economists have adjusted their 2020 forecast for global GDP growth from -5.2% to -4.3% to account for early signs of recovery, their outlook for 2021 has worsened at the same time due to lingering effects of the pandemic. As the following chart shows, COVID-19 has thrown the world economy off its growth trajectory and it is not expected to surpass pre-pandemic output before 2022.


“In the midst of every crisis, lies great opportunity,” a quote widely attributed to Albert Einstein says. The current crisis is no different in that it also presents a chance for policy adjustments. “As countries formulate policies for recovery, they have a chance to embark on a greener, smarter, and more equitable development path. Investing in green infrastructure projects, phasing out fossil fuel subsidies, and offering incentives for environmentally sustainable technologies can buttress long-term growth, lower carbon output, create jobs, and help adapt to the effects of climate change,” World Bank President David Malpass writes in his opening remarks.



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Published By: Atilla Yeşilada

GlobalSource Partners’ Turkey Country Analyst Atilla Yesilada is the country’s leading political analyst and commentator. He is known throughout the finance and political science world for his thorough and outspoken coverage of Turkey’s political and financial developments. In addition to his extensive writing schedule, he is often called upon to provide his political expertise on major radio and television channels. Based in Istanbul, Atilla is co-founder of the information platform Istanbul Analytics and is one of GlobalSource’s local partners in Turkey. In addition to his consulting work and speaking engagements throughout the US, Europe and the Middle East, he writes regular columns for Turkey’s leading financial websites VATAN and www.paraanaliz.com and has contributed to the financial daily Referans and the liberal daily Radikal.