World Bank: per capita income to shrink

World Bank: per capita income to shrink

The shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into severe contraction.

According to World Bank forecasts, the global economy will shrink by 5.2 per cent this year. That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank said in its June 2020 Global Economic Prospects.

Economic activity among advanced economies is anticipated to shrink seven per cent in the year as domestic demand and supply, trade, and finance have been severely disrupted.

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Emerging market and developing economies (EMDEs) are expected to shrink by 2.5 per cent this year, their first contraction as a group in at least 60 years. Per capita income is expected to decline by 3.6 per cent, which will tip millions of people into extreme poverty this year.

The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing.