According to forecasts released on Tuesday, January 5, despite the recession in 2020, the eurozone’s economic recovery this year will be weaker than the World Bank initially predicted.
According to forecasts, single currency countries are expected to grow by 3.6% of GDP by 2020 after a decline of 7.4%. This is good news and bad news compared to the predictions made by the Washington-based organization in June.
The good news is that last year’s decline in GDP will be slightly lower than expected, with annual-year declines of 7.4% and 9.1%, respectively. The bad news is that this year, 2021, the recovery will be very moderate, with a downward correction of 0.9 percentage points to 4.5% to 3.6% of GDP.
This cut of about 1 percentage point was due to the second wave of the Govt-19 epidemic, which was more severe than expected in advanced economies and especially in Europe. “In advanced economies, early recovery stagnated in the third quarter after a resurgence of epidemics, indicating a slow and difficult recovery,” the World Bank said in a note on global economic prospects in its January report.
“The decline in global economic activity in 2020 is projected to be slightly lower than previously predicted, mainly due to more moderate contractions in the advanced economies and a much stronger recovery in China,” the agency said.
By 2022, the World Bank points to a much more serious recovery than the rest of the advanced economies considered in this report. “Growth is expected to increase to 4% by 2022 as it contributes to stabilizing widespread vaccine consumption and investment”, but is 3.8% lower than predicted in the pre-epidemic period.
Everything depends on the vaccine
But these predictions are based on the assumption that the vaccine is progressing smoothly and goes with a sufficient immunization rate to resume its normal course of economic activity.
“In a negative scenario, infections continue to increase and vaccination implementation is postponed, which could limit global expansion to 1.6% by 2021”, see World Bank economists. Can be accelerated “.
In the particular case of the eurozone, the second wave of World Bank Covit-19 indicates the intensity of the rise. “After a historic slump triggered by the epidemic, the recovery of economic activity in the third quarter of last year was hampered by the strong resurgence of Govt-19, which led to the reintroduction of restricted prison operations by several member states,” the report said.
“The various service sectors that are important to the region’s economy – especially tourism – are depressed and should not recover until effective epidemic management improves confidence in the security of personal contacts,” the World Bank warns.
In terms of the global economy, the company, led by David Malpas, expects a 4% expansion in 2021, which is expected to be the initial delivery of the Govt-19 vaccine improvement throughout the year, but it also depends on the policies pursued by governments. “However, the recovery will be moderate unless policymakers take decisive action to control the epidemic and implement investment-enhancing reforms,” he warns.