Covid-19 has definitely messed up the economy around the world. Businesses have shut down. People have lost jobs. Unemployment has shot up in most countries and economies are literally collapsing.
The World Bank now estimates that the global economy is set to contract the highest since the end of World War II.
According to the World Bank, global GDP will shrink by 5.2 percent, the 4th highest drop for the last 150 years.
The world’s greatest recessions were witnessed in 1914, 1930, and 1945. The expected recession that has already started taking shape is said to be the worst and one that will collapse economic giants.
This year’s recession will also be the first in history to be triggered by a pandemic since that which happened in 1870.
The speed and depth with which it has struck, suggests the possibility of a sluggish recovery that may require policymakers to consider additional interventions ~ World Bank President David Malpass.
According to the World Bank, economic activities in advanced economies are expected to shrink by more than 7 percent in 2020 as a result of shocks from Covid-19.
Emerging markets and developing economies are expected to contract by 2.5 percent, the largest contraction combined in 60 years.
The worst-hit economies by Covid-19 are developing countries where the informal sector which forms the bulk of the economy has collapsed, rendering millions jobless.
Per capita incomes are expected to decline by 3.6 percent. This is expected to push millions of people around the world into extreme poverty. People will no longer have jobs or any source of income to support them.
Countries whose economies rely more on global trade, exports, and tourism are the hardest hit as the countries continue to impose lockdowns to prevent the spread of Covid-19.
This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges ~ World Bank Vice President for equatable growth Ceyla Pazarbasioglu.
READ: Is COVID-19 An External Demand And Supply Shock Or Domestic?