World Bank Lowers Growth Forecast from 4.2% to 3.8% This Year Due to "COVID-19 Resurgence Impact"

WB "Urgent Structural Reforms Needed to Address Weakening Growth Momentum"

[Asia Economy Reporter Jang Sehee] The World Bank (WB) has projected the global economic growth rate for this year at 3.8%. This is a downward revision of 0.4 percentage points from the 4.2% forecast in the June report last year.

In the 'January 2021 Global Economic Prospects' report released on the 5th (local time), the WB forecasted that the global economy will grow by 3.8% this year. This reflects the recent resurgence of COVID-19 and the intensification of global lockdowns.

The WB publishes its global economic outlook twice a year, in January and June. It does not separately announce growth forecasts for South Korea.

The WB added that the 3.8% forecast assumes effective pandemic response, and considering downside scenarios such as increases in new infections and vaccine supply failures, growth could fall to as low as 1.6%.

The WB expected negative growth in 2020 for all regions except East Asia and the Pacific. It also stated that East Asia and the Pacific and Latin America are the only regions showing improvements in both 2020 and 2021 compared to previous forecasts.

Advanced economies are expected to contract by -5.4%, which is 1.6 percentage points higher than last year, influenced by China's strong performance. On the other hand, most emerging markets and developing countries excluding China are projected to grow by 2.7%, 0.2 percentage points lower.

The East Asia and Pacific region is forecasted to grow by 7.4%, up 0.8 percentage points, due to China's pull and base effects.

Europe and Central Asia are expected to grow by 3.2%, up 0.4 percentage points, due to intensified capital outflows, currency depreciation, and continued increases in confirmed cases. Latin America is projected to grow by 3.7%, up 0.9 percentage points, due to vaccine supply and rising raw material prices.

The WB stated, "Comprehensive structural reforms are necessary to overcome the long-term weakening of growth momentum after the pandemic," and added, "Specific policy priorities should be differentiated according to each country's circumstances." Structural reform alternatives mentioned include ▲ fiscal soundness ▲ enhancing competition ▲ increasing government efficiency ▲ industrial diversification ▲ investment in digital infrastructure ▲ investment in climate change.

This content was produced with the assistance of AI translation services.