Global economy is on a recovery path, but emerging markets and developing economies will be left behind- World Bank

>Slow covid vaccination roll-out in Emerging Markets & Developing Economies

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>These countries are facing rising debt levels and unprecedented poverty heights

>Advanced economies are rebounding significantly, majority of its population vaccinated

The World Bank has warned that uneven distribution of the Covid-19 vaccines around the world will delay recovery in emerging markets and developing countries.In its latest Global Economic Prospects Document , the Washington based global lender projects the global economy to grow by 5.6 percent in 2021—its strongest post-recession pace in 80 years.

However, the Bank says this growth is concentrated in a few major economies, with most emerging market and developing economies (EMDEs) lagging behind. “While about 90 percent of advanced economies are expected to regain their pre-pandemic per capita income levels by 2022, only about one-third of EMDEs are expected to do so” the World Bank Economists cautioned.

The experts noted that in low-income countries, the effects of the pandemic are reversing earlier gains in poverty reduction and compounding food insecurity and other long-standing challenges such as wealth and income inequality. “The global outlook remains highly uncertain, with major risks around the path of the pandemic and the possibility of financial stress amid large debt loads” they observed.

The World Banks says controlling the pandemic at the global level will require more equitable vaccine distribution, especially for low-income countries. In addition to the necessary efforts to pursue widespread vaccination, policy makers face a difficult balancing act as they seek to nurture the recovery through efficiently allocated fiscal support while safeguarding price stability and fiscal sustainability.

In Sub Saharan Africa economic recovery will be very minimal. The World Bank says this tepid recovery in the region will make little progress in reversing the increase in extreme poverty caused by the pandemic.

Economic activity in Sub Saharan countries is expected to expand a modest 2.8 percent in 2021 and 3.3 percent next year 2022. 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 extreme poverty because of COVID-19, per capita income growth is set to remain feeble, averaging 0.4 percent a year in 2021-22, reversing only a small part of last year’s loss.

Risks to the outlook are tilted to the downside, and include lingering procurement and logistical impediments to vaccinations, further increases in food prices that could worsen food insecurity, rising internal tensions and conflicts, and deeper-than- expected long-term damage from the pandemic.

For low income countries ( LIC’s), most of which are in the Sub Saharan region , growth is expected to pick up in 2021, reaching 2.9 percent, aided by firming external demand from LICs’ trading partners.In 2020, the COVID-19 pandemic pushed growth in these countries down to 0.7 percent—the slowest pace in 27 years—with per capita income contracting by 2 percent. Activity has since picked up somewhat, aided by stronger activity in major trading partners and higher commodity prices.

Nonetheless, growth continues to be held back by the ongoing pandemic and its legacies. Continued infections have delayed the resumption of activity in some sectors, particularly in those dependent on face-to-face interactions.

The pace of vaccination has been extremely slow in LICs, in part due to procurement hurdles and limited financing. As of late May, only about 0.3 percent of the population in LICs has received at least one dose of vaccine—a mere one-tenth of the share of the population vaccinated in EMDEs and just one-hundredth of the share in advanced economies.

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