The global economy is set for the fastest recovery from recession for more than 80 years, but poor nations are at risk of falling further behind wealthy countries amid slow progress with the Covid-19 vaccine, the World Bank has said.
In its half-yearly outlook report, the Washington-based institution said the world economy was forecast to grow at 5.6% this year, in a sharp upgrade from previous estimates it made in January for growth of 4.1%.
It said this would mark the fastest post-recession recovery in 80 years, fuelled by growth in a few major economies where rapid progress with the Covid-19 vaccine has enabled a faster return to relative normality. However, developing nations will continue struggling with the virus and its aftermath for longer, worsening divisions between rich and poor nations.
Calling for a wider distribution of Covid-19 vaccines to low-income nations where progress has been slower, it said the world economy would remain about 2% below where it would have been without the pandemic by 2022 but that poorer countries were lagging behind.
Sounding the alarm over the uneven recovery, the bank said about 90% of rich nations were expected to regain their pre-pandemic levels of GDP a head by 2022, compared to only about one-third of low-income countries.
David Malpass, the bank’s president, said: “While there are welcome signs of global recovery, the pandemic continues to inflict poverty and inequality on people in developing countries around the world.”
“Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries. As the health crisis eases, policymakers will need to address the pandemic’s lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability.”
The intervention comes as pressure mounts on G7 leaders meeting at Carbis Bay in Cornwall this week to raise their spending to support low-income nations and help provide more Covid-19 vaccines.
More than 100 former prime ministers, presidents and foreign ministers have demanded that leaders from the group of rich western economies agree to provide two-thirds of the $66bn (£46.6bn) needed to vaccinate low-income nations against Covid.
Signatories to the letter included former UK prime ministers Gordon Brown and Tony Blair, as well as prominent figures such as former UN secretary general Ban-Ki Moon and 15 former African leaders.
Issuing its Global Economic Prospects (GEP) report, the World Bank said the Covid-19 pandemic had reversed years of poverty reduction gains, aggravated economic insecurity in poorer nations, and worsened other longstanding challenges.
By the end of this year, it warned about 100 million people across low-income countries will have fallen back into extreme poverty.
The 189-country development institution said it expected the US economy would grow by 6.8% this year, reflecting large-scale government support and the relaxation of pandemic restrictions amid progress deploying the Covid-19 vaccine. Growth in other advanced economies is gathering pace, but to a lesser extent.
China is expected to grow by 8.5%, after returning to growth earlier than other countries having suffered earlier in the pandemic as the country where Covid-19 was first identified in late 2019.
Growth in emerging and developing markets is expected to grow by 6%, helped by demand for natural resources and elevated commodity prices as international trade recovers from the pandemic. However, excluding China, developing markets are expected to grow by a more modest 4.4%, held back by slower progress with the Covid-19 vaccine and a resurgence in infection rates.
The World Bank said gains for this group of countries – which includes India, South Africa, Bangladesh and Mexico – would not be sufficient to recover losses incurred in the 2020 recession, and that output in 2022 was expected to still be 4.1% below pre-pandemic projections.
“Losses are anticipated to worsen deprivations associated with health, education and living standards. Major drivers of growth had been expected to lose momentum even before the Covid-19 crisis, and the trend is likely to be amplified by the scarring effects of the pandemic,” the bank said.