World Bank President: "Widening Inequality Between Countries After COVID-19... A Tragic Reversal"

David Malpass, President of the World Bank (WB)
[Image source=Reuters Yonhap News]

[Asia Economy Reporter Kim Suhwan] David Malpass, President of the World Bank (WB), warned that inequality between advanced countries and developing countries will worsen after the COVID-19 pandemic.

President Malpass said this at a WB event on the 11th (local time), stating that he is witnessing a "tragic reversal" in many aspects.

He described the global economy as facing challenging conditions for many developing countries suffering from delayed vaccinations, rising prices, limited policy support, and job shortages.

He expressed concern that while advanced countries are expected to see nearly 5% growth in per capita income this year, low-income countries will see only 0.5%, causing inequality to widen sharply.

He also forecasted that the global economy will grow by 5.7% this year, with a growth rate of 4.4% expected next year.

Earlier, the WB had projected a 4.1% growth rate in its World Economic Outlook report released in January this year, but revised the forecast upward significantly to 5.6% in June.

President Malpass predicted that while advanced countries are recording economic growth levels prior to the COVID-19 pandemic, the GDP of developing countries will remain about 4% lower than pre-pandemic projections even next year.

He said, "We are witnessing a 'tragic reversal' of progress in many respects," adding that efforts to reduce extreme poverty have regressed by years, in some cases decades.

He revealed that during the pandemic last year, the debt burden of low-income countries surged by 12% to a record high of $860 billion. He emphasized the need for a comprehensive approach including debt relief, restructuring, and improved transparency for these countries.

He also mentioned that the WB is raising $100 billion from advanced countries to address the widening gap.

Meanwhile, Carmen Reinhart, Chief Economist of the WB, said that economic growth and building social safety nets are essential for reducing poverty rates, noting that "developing countries were already facing challenging conditions even before COVID-19."

She added, "Economic growth in these countries has been sluggish since 2015," emphasizing again the need for economic growth policies, stating that "economic growth induces recovery along with job creation."

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