The coronavirus pandemic is expected to cause the global economy to contract 5.2% this year – the deepest recession since World War II, the World Bank said on Monday.
This is considerably higher than the forecast of a 3% contraction by the International Monetary Fund in in its World Economic Outlook report in April.
According to the World Bank's latest Global Economic Prospects report, it expects South Africa's economy to shrink 7.1%.
The report added that advanced economies were expected to contract 7% in 2020, compared to emerging markets, which are expected to contract 2.5%.
The #COVID19 pandemic shock is expected to cause the global economy to contract 5.2% this year—the deepest recession since WWII. The speed of forecast downgrades suggests a further downward revision is possible. https://t.co/u3xr5H1AKs #WBGEP2020 pic.twitter.com/k0Oc23Tuif— World Bank (@WorldBank) June 8, 2020
The World Bank further warned that the latest global forecast could be revised downward if the pandemic and its related uncertainty – as well as lockdowns across the globe – persisted.
"The baseline forecast envisions a 5.2 percent contraction in global GDP in 2020—the deepest global recession in decades. Per capita incomes in most emerging and developing economies will shrink this year.
"The pandemic highlights the urgent need for policy action to cushion its consequences, protect vulnerable populations, and improve countries’ capacity to cope with similar future events. It is also critical to address the challenges posed by informality and limited safety nets and undertake reforms that enable strong and sustainable growth," it said.