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Global Economic Prospects

A Strong but Uneven Recovery

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Foreword

In his Foreword, World Bank Group President David Malpass reflects on the uneven global recovery and notes that “How national governments, the private sector, and international institutions respond to the challenges of poverty, inequality, and climate change as we emerge from a crisis that has affected us all will be defining choices of our age. We need to act forcefully to address these challenges and be able to pursue green, resilient, and inclusive development.”

Global and Regional Outlooks

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Global

The global economy is set to expand 5.6 percent in 2021—its strongest post-recession pace in 80 years. This recovery is uneven and largely reflects sharp rebounds in some major economies. In many emerging market and developing economies (EMDEs), obstacles to vaccination continue to weigh on activity. By 2022, last year’s per capita income losses will not be fully unwound in about two-thirds of EMDEs. The global outlook remains subject to significant downside risks, including the possibility of additional COVID-19 waves and financial stress amid... See More

Global and Regional Outlooks

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East Asia and Pacific

Growth in East Asia and Pacific (EAP) is projected to accelerate to 7.7 percent in 2021, largely reflecting a strong rebound in China. Nevertheless, output in two-thirds of the countries in the region will remain below pre-pandemic levels until 2022. The pandemic is expected to dampen potential growth in many economies, especially those that suffered most from extended outbreaks of COVID-19 and the collapse of global tourism and trade. Downside risks to the forecast include, the possibility of repeated and large COVID-19 outbreaks amid delayed ... See More

Global and Regional Outlooks

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Europe and Central Asia

Growth in Europe and Central Asia (ECA) is projected to reach 3.9 percent in 2021, with firming external demand and elevated industrial commodity prices offsetting the negative impact of recent resurgences in new COVID-19 cases. Regional growth is forecast to remain at 3.9 percent in 2022 as the recovery in domestic demand gains traction. The outlook remains uncertain, however, with uneven vaccine rollouts and the withdrawal of domestic macroeconomic support measures weighing on the regional recovery. Growth could be weaker than projected if th... See More

Global and Regional Outlooks

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Latin America and the Caribbean

Growth in Latin America and the Caribbean (LAC) is projected to be 5.2 percent in 2021—a rebound insufficient to return GDP to 2019 levels this year after a historically deep recession in 2020. The rebound will be supported by moderate progress in vaccine rollouts, relaxation of mobility restrictions, and improved external economic conditions. Per capita income losses will still be deep in 2022, particularly for small island economies in the Caribbean. Although spillovers from robust growth and additional fiscal support in the United States thr... See More

Global and Regional Outlooks

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Middle East and North Africa

Output in the Middle East and North Africa region is projected to grow by a subdued 2.4 percent in 2021, only half the pace of the recovery that followed the 2009 global recession. Higher oil prices have bolstered growth prospects in oil exporters, but the improvement has been limited by new virus outbreaks and mixed vaccination progress. COVID-19 resurgences have also worsened the outlook for oil importers. By 2022, regional activity is expected to remain 6 percent below pre-pandemic projections. Risks to the regional outlook remain predominan... See More

Global and Regional Outlooks

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South Asia

Output in South Asia is expected to expand 6.8 percent in 2021, a pace on par with average growth for the previous decade (2010-19). Stronger-than-expected momentum at the beginning of the year has been disrupted by a large surge of COVID-19 cases. Despite continued recovery, output in 2022 is forecast to be 9 percent below pre-pandemic projections. Poverty rates have risen, and by the end of this year more than half the new global poor are expected to live in the region. The outlook could be weaker if vaccination does not proceed as quickly as... See More

Global and Regional Outlooks

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Sub-Saharan Africa

Output in Sub-Saharan Africa (SSA) is expected to expand a modest 2.8 percent in 2021, and 3.3 percent next year. Positive spillovers from strengthening global activity, better international control of COVID-19, and strong domestic activity in agricultural commodity exporters are expected to gradually help lift growth. Nonetheless, the recovery is envisioned to remain fragile, given the legacies of the pandemic and the slow pace of vaccinations in the region. In a region where tens of millions more people are estimated to have slipped into extr... See More

Four Topical Issues

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High Trade Costs: Causes and Remedies

As the global economy rebounds from the COVID-19-induced global recession, the accompanying strength in global trade offers an opportunity to jump-start the recovery in emerging market and developing economies (EMDEs). Lowering cross-border trade costs could help revive trade growth. Trade costs are high: on average, they double the cost of internationally traded goods in comparison to domestic goods. Tariffs account for only one-fourteenth of average trade costs; the bulk of trade costs are incurred in shipping and logistics, as well as cumbe... See More

Four Topical Issues

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Emerging Inflation Pressures: Cause for Alarm?

After declining in the first half of 2020, global inflation has rebounded quickly on recovering activity. While global inflation is likely to continue rising in the remainder of this year, inflation is expected to remain within target bands in most inflation-targeting countries. Among emerging market and developing economies (EMDEs) where recent price pressures may raise inflation above those economies’ target ranges, such pressures may not warrant a monetary policy response—provided they are temporary and inflation expectations remain well-anc... See More

Four Topical Issues

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What is Next? Growth Scenarios Beyond 2021

Global growth is set to reach 5.6 percent in 2021—the strongest post-recession pace in 80 years. Nonetheless, the recovery is expected to be highly uneven, and there is substantial uncertainty about the strength and durability of this anticipated upturn beyond 2021. This box explores two alternative scenarios. In a “Faltering Recovery” scenario, the global economy slows in response to the possibility of recurring local COVID-19 outbreaks, mounting inflationary pressures, and a sharp tightening of global financial conditions during the next two ... See More

Four Topical Issues

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Food Price Volatility and Inflation in Low-income Countries

Inflation in low-income countries (LICs) increased in the run-up to, and following, the outbreak of COVID-19. The rise has been largely driven by increases in food prices and currency depreciations. Higher prices for food, which accounts for about half of consumption in LICs, threaten to increase poverty. In the near term, further rises in global agricultural prices are likely to add to inflationary pressures in LICs. Subsequently, an expected stabilization of commodity prices and moderate demand growth are likely to result in a gradual decline... See More

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Global Economic Prospects

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