The world Bank estimates that between 70 and 100 million people could fall into extreme poverty, thus wiping out the progress made the past three years in the fight against poverty.
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June 8, 2020
Updated on June 9, 2020 at 0h05
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The world is undergoing its most extensive economic crisis in the last 150 years, according to the world Bank
Delphine Touitou
Agence France-Presse
Heather Scott
Agence France-Presse
WASHINGTON, dc — The global economy must contract 5.2% this year because of the new coronavirus, never seen since the Second world War. But it is the number of countries that will meet in the recession that makes this a crisis is the worst since the Great Depression of the 1870s, stressed on Monday the world Bank.
The pandemic of COVID-19 has had an economic impact “rapid and massive” which has never affected so many countries in the last 150 years, and this, in spite of the massive aid of the governments, according to a new forecast of the institution published on Monday.
“We have witnessed a monetary and fiscal stimulus unprecedented in the advanced economies, in emerging markets and development”, stressed Ceyla Pazarbasioglu, vice-president of the division equitable Growth and Finance, during a conference call.
So far, it will take longer for a recovery, she said. “This is a devastating blow in all economies that need global action urgently needed”, she added.
“This is a crisis that should leave scars for a long time and pose immense challenges on a global scale”.
Extreme poverty
The world Bank estimates that between 70 and 100 million people could fall into extreme poverty, thus wiping out the progress made the past three years in the fight against poverty.
Prior to this health crisis, the institution was forecasting a further decrease in 2020 in the proportion of the world population living with less than US $1.90 per day.
The pandemic that began late last year in China affects the vast majority of countries in the world.
She has made more than 400, 000 deaths, according to the census of official figures by the AFP.
To stop the contamination and avoid, above all, health systems are completely overwhelmed, many countries have taken measures for containment which have put their respective economies to their knees.
Towards a financial crisis?
And if the world Bank is forecasting a rebound in 2021, the risk of a second wave of infections, in the absence of a vaccine, is not ruled out, which could undermine the recovery.
If China, world’s second economic power, is almost the only large economies to show growth this year, the slowdown is such that it will upset the recovery in the developing countries, has warned the Bretton Woods institution.
For the only advanced economies in which the consumption and supply have collapsed under the effect of the paralysis in the sector of transport, hotels and restaurants as well as leisure, the contraction will amount to 7 %, estimated for the time being the world Bank.
The GDP of emerging markets and developing economies are projected to decline by 2.5 %, “the first contraction for this group of countries for at least sixty years.”
Ayhan Kose, director of development prospects, said in the conference call, the difficulty of making forecasts for a crisis like a natural disaster.
Also the institution has it provided a worst-case scenario : in the case of a second wave of the pandemic or whether the authorities were forced to resume the containment measures, the global GDP could shrink by 8 %.
“These interruptions of the business could force companies to stop their activity and pay back their debt”, warn the authors of the report, as the debt of private companies were already a concern before the health crisis.
Finally, though, the recovery with a growth rate of 4.2 % for next year materialize, “in many countries, the deep recessions caused by the COVID-19, should weigh on the growth capacity for years to come,” the report notes.
Last week, the president of the World Bank, David Malpass, had, him, deplored the lack of investments, which will slow down the recovery.
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THE UNITED STATES IN a RECESSION SINCE FEBRUARY AFTER 128 MONTHS Of EXPANSION
The United States went into recession in February after 128 months of expansion, according to the committee, which referred the matter to the United States, which has even revised its definition because of the brutality of the shock caused by the pandemic of sars coronavirus.
“The peak of the economic activity monthly occurred in the u.s. economy in February 2020. This peak marks the end of the expansion that began in June 2009 and the beginning of a recession. The expansion lasted 128 months,” said Monday the committee of the dating of economic cycles from the National Bureau of Economic Research, whose authority in the matter.
The traditional definition of a recession involves a decline in economic activity for two consecutive quarters, but the committee “has concluded that the magnitude of the unprecedented decline in employment and production, and its spread to the economy as a whole, deserve to present this episode as a recession, even if it had to be shorter than contractions earlier,” notes the Committee in a press release.
The pandemic that has hit the United States in the beginning of the year has done nearly 110 000 dead to this day according to official figures, and brought to its knees the first economy in the world.
In all countries, local authorities have taken measures containment more or less severe, which were put brutally to the shutdown of entire sectors of the economy such as tourism or catering, as well as a part of manufacturing production.
Several tens of millions of Americans that are registered unemployed for the month of march, and the GDP has fallen nearly 5 % in the first quarter. Economists predict that it will unscrew by around 20 % in the second quarter when the containment measures involved the greater part of the population.
The first economy of the world, however, shows some signs of recovery after the partial reopening of a part of the federated States and the injection of 3000 billion US $(4014 $ billions) aid to businesses and individuals, as well as thousands of billions of additional dollars in the form of cash granted by the u.s. central Bank. AFP
