Nigeria and other developing economies as well as emerging markets will likely report a 5% growth this year even though output is expected to be subdued relative to pre-pandemic levels, Washington-based World Bank said Thursday.
However, the fragile recovery could be at the mercy of several risks like upset in vaccine distribution or upset caused by the humongous debts heaped up by emerging economies and developing markets.
“Growth in emerging market and developing economies is envisioned to firm to five per cent in 2021, but EMDE output is also expected to remain well below its pre-pandemic projection,” World Bank said in its January 2021 Global Economic Prospects report.
Risks to the global economy are likely to still be present in the midst of low activity and weak income levels, which might be prolonged, according to the World Bank.
The Bretton Woods institution put global growth rate at 4%, more than 5% lower than the level it were before the coronavirus broke out.
Global economy had contracted by 4.3% last year, making it the fourth worst global recession in a century and a half, only better than the two World Wars and the Great Depression.
The World Bank warned that “there is a material risk that setbacks in containing the pandemic or other adverse events derail the recovery.”
COVID-19 has aggravated the threats posed by a rise in world debt over ten years, World Bank said, noting that record debt levels expose the global economy to pressure from financial markets.
The pandemic is envisaged to speed up the drawback in potential growth in the next ten years, eroding the chances of poverty alleviation.
“Limiting the spread of the virus, providing relief for vulnerable populations, and overcoming vaccine-related challenges are key immediate priorities,” the lender said.
“Although support for businesses and households will need to continue, it will be constrained by limited fiscal and monetary policy space.
“To avoid a decade of subpar growth, ambitious reforms will be needed to reverse the damaging legacy of the pandemic.