Category: Covid-19

This joint blog post has been produced by speakers following a conversation organized by WISE on the occasion of the International Womens Day (March 8th), on the consequences of the pandemic on girls and womens education. The following summarizes their contributions and highlights recommendations on potential solutions to remedy to this issue. It originally appeared here.

The returns to schooling are especially high for women. That is, the earnings increment associated with more education is in fact higher for women than for men. One additional year of schooling and womens wages go up 12% (compared with 10% for men).

However, the schooling gains of girls and women are under threat. Prior to the COVID-19-induced school closures, girls were staying in school longer and learning more than at any other time. The longstanding disadvantage for girls in terms of enrollment had been declining. In some cases, this led to a reverse gap where girls outperform boys in both enrollment rates and learning outcomes a female learning premium.

COVID-19 may put a temporary halt to this progress. COVID-19-induced school closures may slow or reverse these gains and may further prevent girls and women from realizing the potential returns representing a hidden future cost. Urgent action is needed to ensure that girls and women can realize the returns to their schooling.

The World Bank is forecasting lower levels of schooling, learning, and future earnings because of school closures due to COVID-19. Learning loss is expected and predicted. Recent evidence from several countries shows that the COVID-19 slide is real. For women and girls, who are already being significantly negatively affected by the pandemic, there is a particular risk in the realm of education. The pandemic puts girls at an increased risk of:

UNESCO has projected that 11 million girls may never return to school following the pandemic.

What can be done, what might work?

Remote learning was a useful action in the Spring of 2020; but its not the answer now. Rather, we need to open schools safely in order to mitigate and reverse learning losses and get girls back in school. For many girls, especially the youngest, the learning lost during the pandemic can be limited and even reversed by improving distance education during school closures and by implementing learning recovery programs such as Teach to the Right Level and High Dosage Tutoring, which the evidence has shown to be effective. However, for older girls, the risk of dropping out is real, and they may leave school before their learning losses can be recovered, unless innovative programs are put in place in a timely manner.

The risk of dropping out needs to be addressed right away by providing extra support to students and their families to ensure that they stay in school, making sure to target girls as being at a high risk of dropout and learning losses. Targeted support may also be needed to overcome constraints specific to girls, especially adolescent girls. For example, the Keeping Girls in School Program in Zambia provides cash transfers to families of adolescent girls so they can afford to keep their daughters in school and has set up an early warning system to identify girls at risk of dropping out and of other vulnerabilities.

Organizations and communities can work to ensure students continue their education while at home but at the same time ensure that they are receiving other crucial services as well, so they do not lose momentum.

Malaika Foundation in the Democratic Republic of Congo, consisting of a school for 370 girls, a community center serving 5,000 youth and adults annually, a clean water initiative with 20 wells servicing more than 32,000 people and a sustainable agriculture program, for example, developed a comprehensive plan with staff to distribute food, hygiene items and other necessities to their students during lockdowns, keeping them safe and healthy while they remain academically up to date. This resulted in 98 percent of students returning to school after closure, which is a hugely higher rate than the average.

Going forward, we know that the classroom is forever changed. The post-pandemic classroom will be equipped with modern equipment and homes will be connected. The education system will be a combination of traditional and distance (online) education. For this and other reasons, we need to invest in girls skills, including ICT tools.

The role of government is key. Progress will only come when are able to implement at scale, and once policymakers, business leaders, nonprofits, and individual communities work hand in hand.

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COVID-19: Bringing Girls Back to School - World Bank Blogs

The ongoing COVID-19 pandemic has exacerbated global income inequality, partly reversing the decline of the previous two decades. Weak recoveries in emerging market and developing economies (EMDEs) are expected to raise between-country inequality. Within-country income inequality is also estimated to have increased somewhat in EMDEs because of severe job and income losses among lower-income population groups. Rising inflation, as well as pandemic-related disruptions in education could further increase within-country inequality in the longer run. Reversing the increase in global income inequality requires measures to reduce between-country and within-country inequality, underpinned by support from the global community.

Read more on the topic in theJanuary 2022 Global Economic Prospects.

The COVID-19 pandemic jeopardizes the progress made in reducing global income inequality achieved in the previous two decades. In contrast to the global financial crisis of 2008-10, the deep recession triggered by the pandemic and the lagging economic recovery in EMDEs compared with advanced economies have raised between-country income inequality. By some measuresbetween-country Gini and Theil indices based on real per capita GDPbetween-country inequality reversed back to levels of the early 2010s.

Change in global between-country income inequality

Sources: World Bank.Note: The figure shows annualized changes in the between-country Gini and Theil indices in 2008-10 and 2019-21. The calculations are based on a strongly balanced panel of 176 countries. The Gini index is on 0-100 scale. The Theil generalized entropy GE (1) index and the Gini index are computed using GDP per capita, purchasing power parity-adjusted (constant 2017 international dollars), based on the World Banks World Development Indicators and growth estimates.

The pandemic is estimated to have increased within-country income inequality in EMDEs, although the magnitude of the increase has been small, on average. Simulations for a sample of 34 EMDEs with sufficient data, suggest that income inequality, as measured by the Gini index, has increased in 2020 by 0.3 points, reversing the continued decline in income inequality observed in EMDEs since the 2000s. The magnitude of the increase, however, is relatively smallcomparable to an annual average decline in within-country inequality in the preceding two decades in this sample. The increase in within-country inequality reflected severe job and income losses among low-skilled workers, low-income households, informal workers, and women.

Change in within-country income inequality in EMDEs, 2019-20

Sources: Narayan et al. (2022); World Bank.Note: EMDEs = emerging market and developing economies; LICs = low-income countries. The figure shows the difference between the estimated average change in the Gini index in the COVID-19 scenario and the no-pandemic counterfactual scenario. The simulations estimate the changes in the income distribution of households in 2020 against a counterfactual 2020 income distribution that assumes the last pre-pandemic sectoral output growth forecast for 2020. The sample includes 34 countries. The simulations are based on country-specific sectoral growth projections and the Harmonized High-Frequency Phone Surveys data as of July 2021.

The increase in within-country inequality caused by the pandemic may become entrenched as pandemic-induced disruptions to education and the disproportionate adverse effects on low-income households may worsen intergenerational mobility. High inflation and surging public debt levels may hamper countries ability to support vulnerable groups and facilitate recovery and sustainable growth.

Children engaged in education during school closures in EMDEs, 2020

Sources: World Bank.Note: EMDEs = emerging market and developing economies; LICs = low-income countries. Calculations based on the Harmonized High-Frequency Phone Surveys data from the COVID-19 Household Monitoring Dashboard for wave 1 in 2020. Response to survey question about children engaged in any education activities since school closures (percent of household with school age children who attended school before the pandemic), by income group (simple averages). Sample consists of 49 EMDEs, including 14 LICs.

Comprehensive policy effort to lower income inequality.

A comprehensive strategy is needed to steer the global economy onto a more inclusive development path. Such a strategy needs to include measures to reduce both between-country and within-country inequality through national reforms and with support from the global community. This involves a rapid global rollout of vaccination and productivity-enhancing reforms in EMDEs to lower between-country inequality; fiscal support targeted at vulnerable population groups and measures to broaden access to education, health care, digital services and infrastructure; and assistance from the global community to resolve debt overhangs and to ensure an open and rules-based global trade and investment climate that nurtures faster productivity growth in EMDEs.

References

Narayan, A., A. Cojocaru, S. Agrawal, T. Bundervoet, M. Davalos, N. Garcia, C. Lakner, et al. 2022. COVID-19 and Economic Inequality: Short-Term Impacts with Long-Term Consequences. Policy Research Working Paper 9902, World Bank, Washington, DC.

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Global income inequality and the COVID-19 pandemic in three charts

Since the beginning of the COVID-19 pandemic, we have been exploring its effects in the Democratic Republic of Congo (DRC) through household high-frequency phone surveys implemented in Kinshasa, Kasai and Central Kasai, and East DRC (Beni, Bunia, Goma, and Lubero). Overall, we have found that COVID-19 pandemic-related shocks have adverse social and economic impacts, such as declined labor and non-labor income and the resulting harmful coping strategies, as well as disruptions in goods and services markets and health and education services.

Most obviously, job losses and reductions in non-labor income have resulted in a decline in income. In fact, in the aftermath of the outbreak of the COVID-19 pandemic, a significant proportion of household heads or members did not work. In Kinshasa, nearly half of household heads reported not having worked, mainly for reasons related to the COVID-19 pandemic, while more than 10% of households experienced job losses for some household members. This is also the case in East DRC, where about a quarter of respondents reported COVID-19-related job losses in June 2020.

At the same time, the proportion of households receiving remittances in Kinshasa declined from 24.3% before the COVID-19 outbreak to 16.3% in April 2020, with a downward trend in amounts and frequencies. In East DRC, we observed drops in remittances for half of households regarding transfers from abroad, and for 80% of households, regarding family transfers from the country.

Making matters worse for the poor, disruption of goods and services markets have led to inflation in the country, with a 2020 cumulative inflation rate of nearly 16% against 4.6% for the previous year. We found similar patterns for cities like Kinshasa (16.6%) and Goma (16.4%), denoting a reduction in relative income and consequently a deterioration of household well-being.

As a result, there has been a loss of income for households in the aftermath of the outbreak of the pandemic. The decline in absolute and relative incomes led to an increase in poverty. In fact, according to simulations, the 16.6% inflation rate recorded in Kinshasa in 2020 may have resulted in an increase in poverty of 7 percentage points. Also, drops in remittances may increase the incidence of poverty up to 1.4 percentage points in the extreme case where all remittances are removed.

Lower income and limited access to markets have led to an increase of food insecurity and hunger. In fact, 85% of Kinshasa households seem to have reduced food consumption, while severe food insecurity remained high in East DRC with a prevalence of 63% at the end of 2020, and down from around 70% in the preceding months. During the same period, the proportion of households affected by food insecurity in Kasai and Central Kasai was around 87%.

Disruptions in basic services, especially in education and health sectors, are likely to have exacerbated the adverse effects of the pandemic, leading to increased inequality and vulnerability. For example, the very limited and unequal access to digital tools such as internet and account ownership with a mobile-money service provider prevented most Kinshasa schoolchildren from engaging in remote learning activities during school closures and from benefiting from money transfer opportunities. In Eastern DRC, only 4 out of 10 households reported having children engaged in some form of distance learning activity in August 2020.

While the poorest households seem to have been the most affected, the situation remained more worrying for female-headed households. Therefore, to reverse the adverse effects of the crisis and limit long-lasting effects on poor and vulnerable people, it is appropriate to target the latter group.

COVID-19 main facts in Kinshasa and cumulative inflation in the DRC

How can DRC return to normalcy? Only with mass vaccination of the population. We found a certain reluctance of the Congolese population to be vaccinated, with only nearly 39% of Kinshasa households willing to get vaccinated. The main reasons for not accepting vaccines are distrust of the international community (44%), general distrust of vaccines (36.3%), and concerns about vaccine safety, including health risks for adults and children (20%). Overall, the poorest households seemed to be more willing than other households to be vaccinated. This may be because they have less access to information, including controversial messages conveyed by social media. The willingness to be vaccinated is also higher for households headed by women compared to those headed by men.

Households in Eastern DRC show less reluctance in vaccine acceptance. As in the case of Kinshasa, this higher vaccine acceptance rate may be explained by the fact that respondents in the East are among the poorest as they are all eligible for social transfers and have previous experience with pandemics, Ebola most notably. Among this group, almost 70% of respondents would be willing to get themselves and other households members vaccinated once tested vaccines become available for free. It is worth noting that among those refusing the vaccine, the most common reasons cited were either concerns about the safety of the vaccine (77.5%) and distrust in the international community (32.5%).

For vaccination to be successful, it is imperative to better inform Congolese people, especially those in Kinshasa, about its benefits and the need to fight the pandemic at the global level.

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Reversing the adverse effects of the COVID-19 pandemic in the ...

Pima County preparing to roll back many Covid-19 rules and regulations  KOLD

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US House Intel Chairman on the origins of Covid-19  BBC

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Last Updated February 8, 2023Health and Education

Inferring COVID-19 Vaccine Attitudes from Twitter Data: An Application to the Arabic Speaking WorldRoy van der Weide, Policy Research Working Paper 10165, World Bank, Washington, DC, September 2022

Financing Vaccine Equity: Funding for Day-Zero of the Next PandemicRuchir Agarwal, Tristan Reed,Policy Research Working Paper 10067, World Bank, Washington, DC, May 2022

COVID-19 Age-Mortality Curves for 2020 Are Flatter in Developing Countries Using Both Official Death Counts and Excess DeathsGabrielDemombynes, Damien B. C. M. De Walque, Paul Michael Gubbins, Beatric Piedad Urdinola, Jeremy Henri Maurice Veillard, Policy Research Working Paper 9807, World Bank, Washington, DC, October 2021

Indirect Effects on Maternal and Child Mortality from the COVID-19 Pandemic: Evidence from Disruptions in Healthcare Utilization in 18 Low- and Middle-Income CountriesTashrik Ahmed,Timothy Roberton,Monitoring of Essential Health Services Team, Jean Patrick Alfred,Martina Baye, Mamoutou Diabate,Helen Kiarie,Paul Mbaka,Nur Ali Mohamud, Charles Mwansambo, Youssoupha Ndiaye, Charles Nzelu, Anthony Adofo Ofosu, Tsihory Raharison, Husnia Sadat, Francis Smart, Helal Uddin, Naod Wendrad, Chea Sanford Wesseh, Mohamad Lamine Yasane, Sylvain Yuma, Petra Vergeer, Peter M. Hansen, Jed Friedman, Gil Shapira, SSRN Preprint, September 2021

How many infants may have died in low-income and middle-income countries in 2020 due to the economic contraction accompanying the COVID-19 pandemic?GilShapira,Damiende Walque,JedFriedman, BMJ Open, August 2021

Policy Actions to Increase the Supply of COVID-19 Vaccines in the Short TermMamta Murthi and Tristan Reed,Research & Policy Brief 49, World Bank, Washington, DC,August 2021

Disruptions in maternal and child health service utilization during COVID-19: analysis from eight sub-Saharan African countriesGil Shapira, Tashrik Ahmed, Salom Henriette Paulette Drouard, Pablo Amor Fernandez, Eeshani Kandpal, Charles Nzelu, Chea Sanford Wesseh, Nur Ali Mohamud, Francis Smart, Charles Mwansambo, Martina L Baye, Mamatou Diabate, Sylvain Yuma, Munirat Ogunlayi, Rwema Jean De Dieu Rusatira, Tawab Hashemi, Petra Vergeer, Jed Friedman, Health Policy and Planning,czab064, June2021

Five Ways that COVID-19 Diagnostics Can Save Lives : Prioritizing Uses of Tests to Maximize Cost-EffectivenessTristan Reed,WilliamWaites, David Manheim,Damien B. C. M. de Walque, Chiara Vallini, Roberta V. Gatti, Timiothy B. Hallett. Research & Policy Brief 43, World Bank, Washington, DC,February 2021

How to End the COVID-19 Pandemic by March 2022Ruchir Agarwal andTristan Reed,Policy Research Working Paper 9632, World Bank, Washington, DC, April 2021

Modeling and Predicting the Spread of Covid-19: Comparative Results for the United States, the Philippines, and South AfricaSusmita Dasguptaand David Wheeler, Policy Research Working Paper 9419, World Bank, Washington, DC, October 2020

The Human Capital Index 2020 Update: Human Capital in the Time of COVID-19Roberta V. Gatti, Paul Corral, Nicola Dehnen, Ritika DSouza, Juan Mejalenko, andSteven Pennings. Washington, DC: World Bank, September 2020

Remote-learning, Time-Use, and Mental Health of Ecuadorian High-School Students during the COVID-19 QuarantineIgor Asanov, Francisco Flores,David McKenzie, Mona Mensmann, and Mathis Schulte, Policy Research Working Paper 9252, World Bank, Washington, DC,May 2020

How Two Tests Can Help Contain COVID-19 and Revive the EconomyDamien De Walque, Jed Friedman, Roberta V. Gatti, and Aaditya Mattoo, Research & Policy Brief 29, World Bank, Washington, DC, April 2020

Strengthening Public Health Systems: Policy Ideas from a Governance PerspectiveStuti Khemani, Sarang Chaudhary, and Thiago Scot, Policy Research Working Paper 9220, World Bank, Washington, DC, April 2020

Revisiting Poverty Trends and the Role of Social Protection Systems in Africa during the COVID-19 PandemicKibrom A. Abay,Nishant Yonzan,Sikandra Kurdi, andKibrom Tafere, Policy Research Working Paper 10172, World Bank, Washington, DC, September 2022

The Intergenerational Mortality Tradeoff of COVID-19 Lockdown PoliciesLin Ma,GilShapira, Damien B. C. M. De Walque, Quy-Toan Do, Jed Friedman, and Andrei A. Levchenko, Policy Research Working Paper 9677, World Bank, Washington, DC, May 2021

Death and Destitution: The Global Distribution of Welfare Losses from the COVID-19 PandemicFrancisco H. G. Ferreira, Olivier Christian Brigitte Sterck, Daniel Gerszon Mahler, andBenoit Decerf, Policy Research Working Paper 9673, World Bank, Washington, DC, May 2021

Assessing Response Fatigue in Phone Surveys: Experimental Evidence on Dietary Diversity in EthiopiaKibrom A. Abay, Guush Berhane, John Hoddinott, andKibrom Tafere,Policy Research Working Paper 9636, World Bank, Washington, DC, April 2021

COVID-19 and Food Security in Ethiopia: Do Social Protection Programs Protect?Kibrom A. Abay, Guush Berhane, John Hoddinott, andKibrom Tafere, Policy Research Working Paper 9475, World Bank, Washington, DC, November 2020

Lives and Livelihoods: Estimates of the Global Mortality and Poverty Effects of the Covid-19 PandemicBenoit Decerf, Francisco H. G. Ferreira, Daniel Gerszon Mahler, and Olivier Sterck, Policy Research Working Paper 9277, World Bank, Washington, DC, June 2020

Least Protected, Most Affected: Impacts of Migration Regularization Programs on Pandemic ResilienceMaria Jos Urbina,Sandra V. Rozo,Andrs Moya, and Ana Mara Ibez, Policy Research Working Paper 10291, World Bank, Washington, DC, February 2023

Neither by Land nor by Sea: The Rise of Electronic Remittances during COVID-19Lelys Ileana Dinarte Diaz, David Jose Jaume, Eduardo Medina-Cortina, Hernan Winkler,Policy Research Working Paper 10057, World Bank, Washington, DC, May 2022

Occupational Hazards: Why Migrants Faced Greater Economic and Health Risks during the COVID-19 PandemicLaurent Bossavie, Daniel Garrote Sanchez, Mattia Makovec, and Caglar Ozden, Policy Research Working Paper 9873, World Bank, Washington, DC, December 2021

How Has COVID-19 Affected the Intention to Migrate via the Backway to EuropeTijan L. Bah, CatiaBatista, FloreGubert, andDavid J.Mckenzie,Policy Research Working Paper 9658, World Bank, Washington, DC, May 2021

Do Immigrants Push Natives towards Safer Jobs? Exposure to COVID-19 in the European UnionLaurent Bossavie, Daniel Garrote Sanchez, Mattia Makovec, andalar zden,Policy Research Working Paper 9500, World Bank, Washington, DC,December 2020

Who on Earth Can Work from Home?Daniel Garrote Sanchez, Nicolas Gomez Parra,Caglar Ozden, Bob Rijkers, Mariana Viollaz, and Hernan Winkler, Policy Research Working Paper 9347, World Bank, Washington, DC, July 2020

Which Jobs Are Most Vulnerable to COVID-19? What an Analysis of the European Union RevealsDaniel Garrote Sanchez, Nicolas Gomez Parra,Caglar Ozden, andBob Rijkers,Research & Policy Brief 34, World Bank, Washington, DC, May 2020

The Impact of COVID-19 on Electricity Generation: An Empirical InvestigationChang Shen,Anna Alberini, andGovinda Timilsina, Policy Research Working Paper 10116, World Bank, Washington, DC, June 2022

How Well Can Real-Time Indicators Track the Economic Impacts of a Crisis Like COVID-19?Gi Khan Ten,Josh Merfeld,Kibrom Tafere,David Newhouse, andUtz Pape, Policy Research Working Paper 10080, World Bank, Washington, DC, June 2022

The Economic Ripple Effects of COVID-19Francisco J.Buera,Roberto N.Fattal Jaef, P. Andres Neumeyer, Hugo Hopenhayn, and YongseokShin,Policy Research Working Paper 9631, World Bank, Washington, DC, April 2021

Growth of Global Corporate Debt: Main Facts and Policy ChallengesFacundo Abraham, Juan Jose Cortina Lorente, andSergio L. Schmukler,Policy Research Working Paper 9394, World Bank, Washington, DC, September 2020

Recovery from the Pandemic Crisis: Balancing Short-Term and Long-Term ConcernsNorman V. Loayza, Apurva Sanghi, Nurlina Binti Shaharuddin, and Lucie Johanna Wuester,Research & Policy Brief 38, World Bank, Washington, DC, September 2020

Banking Sector Performance During the COVID-19 CrisisAsli Demirguc-Kunt,Alvaro Pedraza Morales, andClaudia Ruiz,Policy Research Working Paper 9363, World Bank, Washington, DC, August 2020

The Effects of the Coronavirus Pandemic in Emerging Market and Developing Economies: An Optimistic Preliminary AccountPinelopi K. Goldberg, andTristan Reed,Brookings Papers on Economic Activity, Summer, 161-211, 2020

Winners and Losers When Private Banks Distribute Government Loans: Evidence from Earmarked Credit in BrazilJose Renato Haas Ornelas,Alvaro Pedraza,Claudia Ruiz-Ortega, and Thiago Silva,Policy Research Working Paper 8952, World Bank, Washington, DC, April 2020

Macroeconomic Policy in the Time of COVID-19: A Primer for Developing CountriesNorman V.Loayza, andSteven Michael Pennings, Research & Policy Brief 28, World Bank, Washington, DC, March 2020

Firm Resources, Strategies, and Survival and Growth during COVID-19: Evidence from Two-Wave Global SurveysSheng Fang, Chorching Goh, Shaomin Li, L. Colin Xu, Policy Research Working Paper 9997, World Bank, Washington, DC, April 2022

Globally Engaged Firms in the COVID-19 CrisisCristina Constantinescu,Ana Margarida Fernandes, Arti Grover, Stavros Poupakis, and Santiago Reyes,Policy Research Working Paper 9991, World Bank, Washington, DC, April 2022

How Resilient Was Trade to COVID-19?Maria Bas,Ana Margarida Fernandes, and Caroline Paunov,Policy Research Working Paper 9975, World Bank, Washington, DC, March 2022

Can Business Grants Mitigate a Crisis Evidence from Youth Entrepreneurs in Kenya during COVID-19Yanina Domenella, Julian C Jamison, Abla Safir, and Bilal Husnain Zia,Policy Research Working Paper 9874, World Bank, Washington, DC, December 2021

Competition and Firm Recovery Post-COVID-19Miriam Bruhn, AsliDemirguc-Kunt, and Dorothe Singer,Policy Research Working Paper 9851, World Bank, Washington, DC, November 2021

The Impact of the COVID-19 Pandemic on Women-Led BusinessesJesica Torres, Franklin Maduko, Isis Gaddis, Leonardo Iacovone, and Kathleen Beegle, Policy Research Working Paper 9817, World Bank, Washington, DC, October 2021

Organizational Resources, Country Institutions, and National Culture behind Firm Survival and Growth during COVID-19Yu Liu, Mike W.Peng, Zuobao Wei, Jian Xu, andL. ColinXu,Policy Research Working Paper 9633, World Bank, Washington, DC, April 2021

The Impact of COVID-19 on Formal Firms: Micro Tax Data Simulations across CountriesPierre Bachas, Anne Brockmeyer, and Camille Semelet, Policy Research Working Paper 9437, World Bank, Washington, DC, October 2020

Winners and Losers from COVID-19: Global Evidence from Google SearchKibrom A. Abay,Kibrom Tafere,and Andinet Woldemichael, Policy Research Working Paper 9268, World Bank, Washington, DC, June 2020

Financing Firms in Hibernation during the COVID-19 PandemicTatiana Didier,Federico Huneeus, Mauricio Larrain, andSergio L. Schmukler, Policy Research Working Paper 9236, World Bank, Washington, DC, May 2020

Talk or Text? Evaluating Response Rates by Remote Survey Method during COVID-19Sofia Fernando Monteiro Amaral, Lelys Ileana Dinarte Diaz, Patricio Dominguez, Santiago M. Perez-Vincent, Steffanny Romero,Policy Research Working Paper 9999, World Bank, Washington, DC, April 2022

The Interplay of Policy, Institutions, and Culture in the Time of Covid-19Sheng Fang,L. Colin Xu, and Yuanyuan Yi, Policy Research Working Paper 9470, World Bank, Washington, DC, November 2020

An Opportunity to Build Legitimacy and Trust in Public Institutions in the Time of COVID-19Stuti Khemani,Research & Policy Brief 32, World Bank, Washington, DC, May 2020

Costs and Trade-Offs in the Fight Against the COVID-19 Pandemic: A Developing Country PerspectiveNorman V.Loayza,Research & Policy Brief 35, World Bank, Washington, DC,May 2020

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COVID-19 Research - World Bank

Per Capita Incomes to Shrink in All Regions

WASHINGTON, June 8, 2020 The swift and massive shock of the coronavirus pandemic and shutdown measures to contain it have plunged the global economy into a severe contraction. According to World Bank forecasts, the global economy will shrink by 5.2% this year.1That would represent the deepest recession since the Second World War, with the largest fraction of economies experiencing declines in per capita output since 1870, the World Bank says in its June 2020 Global Economic Prospects.

Economic activity among advanced economies is anticipated to shrink 7% in 2020 as domestic demand and supply, trade, and finance have been severely disrupted. Emerging market and developing economies (EMDEs) are expected to shrink by 2.5% this year, their first contraction as a group in at least sixty years. Per capita incomes are expected to decline by 3.6%, which will tip millions of people into extreme poverty this year.

The blow is hitting hardest in countries where the pandemic has been the most severe and where there is heavy reliance on global trade, tourism, commodity exports, and external financing. While the magnitude of disruption will vary from region to region, all EMDEs have vulnerabilities that are magnified by external shocks. Moreover, interruptions in schooling and primary healthcare access are likely to have lasting impacts on human capital development.

This is a deeply sobering outlook, with the crisis likely to leave long-lasting scars and pose major global challenges, said World Bank Group Vice President for Equitable Growth, Finance and Institutions, Ceyla Pazarbasioglu. Our first order of business is to address the global health and economic emergency. Beyond that, the global community must unite to find ways to rebuild as robust a recovery as possible to prevent more people from falling into poverty and unemployment.

Under the baseline forecastwhich assumes that the pandemic recedes sufficiently to allow the lifting of domestic mitigation measures by mid-year in advanced economies and a bit later in EMDEs, that adverse global spillovers ease during the second half of the year, and that dislocations in financial markets are not long-lasting global growth is forecast to rebound to 4.2% in 2021, as advanced economies grow 3.9% and EMDEs bounce back by 4.6%. However, the outlook is highly uncertain and downside risks are predominant, including the possibility of a more protracted pandemic, financial upheaval, and retreat from global trade and supply linkages. A downside scenario could lead the global economy to shrink by as much as 8% this year, followed by a sluggish recovery in 2021 of just over 1%, with output in EMDEs contracting by almost 5% this year.

The U.S. economy is forecast to contract 6.1% this year, reflecting the disruptions associated with pandemic-control measures. Euro Area output is expected to shrink 9.1% in 2020 as widespread outbreaks took a heavy toll on activity. Japans economy is anticipated to shrink 6.1% as preventive measures have slowed economic activity.

The COVID-19 recession is singular in many respects and is likely to be the deepest one in advanced economies since the Second World War and the first output contraction in emerging and developing economies in at least the past six decades, said World Bank Prospects Group Director Ayhan Kose. The current episode has already seen by far the fastest and steepest downgrades in global growth forecasts on record. If the past is any guide, there may be further growth downgrades in store, implying that policymakers may need to be ready to employ additional measures to support activity.

Analytical sections in this edition of Global Economic Prospects address key aspects of this historic economic shock:

The pandemic highlights the urgent need for health and economic policy action, including global cooperation, to cushion its consequences, protect vulnerable populations, and strengthen countries capacities to prevent and deal with similar events in the future. It is critically important for emerging market and developing economies, which are particularly vulnerable, to strengthen public health systems, address challenges posed by informality and limited safety nets, and enact reforms to generate strong and sustainable growth once the crisis passes.

Emerging market and developing economies with available fiscal space and affordable financing conditions could consider additional stimulus if the effects of the pandemic persist. This should be accompanied by measures to help credibly restore medium-term fiscal sustainability, including those that strengthen fiscal frameworks, increase domestic revenue mobilization and spending efficiency, and raise fiscal and debt transparency. The transparency of all government financial commitments, debt-like instruments and investments is a key step in creating an attractive investment climate and could make substantial progress this year.

Download the June 2020 Global Economic Prospects report.

Regional Outlooks:

East Asia and Pacific: Growth in the region is projected to fall to 0.5% in 2020, the lowest rate since 1967, reflecting disruptions caused by the pandemic. For more, see regional overview.

Europe and Central Asia: The regional economy is forecast to contract by 4.7%, with recessions in nearly all countries. For more, see regional overview.

Latin America and the Caribbean: The shocks stemming from the pandemic will cause regional economic activity to plunge by 7.2% in 2020.For more, see regional overview.

Middle East and North Africa: Economic activity in the Middle East and North Africa is forecast to contract by 4.2% as a result of the pandemic and oil market developments. For more, see regional overview

South Asia: Economic activity in the region is projected to contract by 2.7% in 2020 as pandemic mitigation measures hinder consumption and services activity and as uncertainty about the course of the pandemic chills private investment. For more, see regional overview.

Sub-Saharan Africa: Economic activity in the region is on course to contract by 2.8% in 2020, the deepest on record. For more, see regional overview.

World Bank Group COVID-19 Response

TheWorld Bank Group, one of the largest sources of funding and knowledge for developing countries, is takingbroad, fast actionto help developing countries strengthen their pandemic response. We are supporting public health interventions, working to ensure the flow of critical supplies and equipment, and helping the private sector continue to operate and sustain jobs. We will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, support businesses, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans.

Visit us on Facebook: http://www.facebook.com/worldbankBe updated via Twitter: http://www.twitter.com/worldbankFor our YouTube channel: http://www.youtube.com/worldbank

1 Using market exchange rate weightings.

Link:

COVID-19 to Plunge Global Economy into Worst Recession ... - World Bank