World Bank’s chief economist Carmen Reinhart said that the global economy may take as much as 5 years to revive from the crisis caused by the pandemic.
“There will probably be a quick rebound as the restriction measures linked to lockdown are lifted, but a full recovery will take as much as five years,” she said while speaking during a conference in Madrid, which was held remotely.
Increase in inequality
The poor population in rich countries will be hit the hardest by the crisis while richer countries will cope better than poorer ones as economic inequality will become even more severe than before. Also, the recession caused by the pandemic will have a long lasting effect on some countries.
She warned that the global poverty rate is also set to rise for the first time in 20 years, she added. Among 34 countries with nominal Gross Domestic Product (GDP) greater than $200 billion, 31 have slipped into recession while two countries – Sweden and Chile are about to move into one, says a recent S&P report. While China, the world’s second largest economy, became the only country to achieve an increase in its GDP.
The World Bank said in a recent report that a V-shaped quick recovery seems unlikely for most countries considering the severity of the crisis. Further, the rebound in 2021 will only be a fraction the slump that the world witnessed.
The 2020 global GDP is expected to fall sharply, at a rate which is 3 times bigger than the global financial crisis that occurred in 2008-2009. “The COVID-19 pandemic combines the worst characteristics of previous crises,” the World Bank added.