According to the World Bank’s Global Economic Prospects (GEP) report released on Tuesday, global output is projected to grow by 4% in 2021, assuming widespread roll-out of a COVID-19 vaccine throughout the year.
However, the projected levels are still 5% lesser than pre-pandemic levels.
India is expected to grow at 5.4% in fiscal year 2021/22 and 5.2% in fiscal 2022/23 after an expected contraction of 9.6% in fiscal 2020/21. Owing to a steep decline in household spending and private investment, output contraction is expected for India in the current fiscal year.
As per the GEP report, there was severe income loss in the informal sector which accounts for 4/5ths of employment. However, manufacture and services are moving towards speedy recovery as indicated by recent data.
The process for global recovery has been countered by emergence of a new strain of the coronavirus but supported by vaccinations, trade and consumption can start improving. After an estimated 3.6% contraction in 2020, U.S. GDP is expected to grow at 3.5% in 2021 and the Euro area at 3.6%.
Emerging market and developing economies (EMDEs) are expected to grow at an average of 4.6 percent in 2021-22 reflecting the above average rebound in China (forecast at 7.9% and 5.2%, this year and next).
"Key elements to the strength of the economic recovery would be investment that embraces the changed economic environment and an ability to reduce inequality", World Bank Group President David Malpass told reporters on Tuesday. He warned of 'dramatic' inequality increases based on the fact that the vulnerable sections were the worst affected by the pandemic and their recovery would prove to be the most difficult to handle.
