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Global Economic Prospects Report: World Bank

Global Economic Prospects Report: World Bank

Why in news?

  • Recently, the World Bank has released its June 2021 Global Economic Prospects where it has forecast India’s GDP growth to be 8.3% for the year 2021-22.

Key findings of the report

  • The world economy is expected to expand at 5.6%, the fastest post-recession growth rate in eighty years.
  • However, global output will still be 2% below pre-pandemic projections by year-end.
  • India’s recovery is being hampered by the largest outbreak of any country since the beginning of the pandemic.
  • The forecast for FY22 (8.3%) takes into account expected economic damage from an enormous second Covid-19 wave and localised mobility restrictions since March 2021.
  • For 2022-23, growth is expected to slow to 7.5% as a result of the pandemic’s effects on the financial position of households, companies and banks

South Asian Data

  • The South Asian region’s economy is expected to contract by 6.7 % in 2020 due to the pandemic.
  • This was led by India’s deep recession, where the economy was already weakened by the stress in non-bank financial corporations.
  • The South Asian region saw the steepest increase in global debt levels.
  • Growth in South Asia is expected to be 3.3% in 2021 and 3.8% in 2022, significantly lower than pre-pandemic projections.

Impacts

  • Massive Inequality: Those with the lowest incomes were worst hit by the downturn and would likely take the longest to regain jobs, healthcare, vaccines and so forth in the post-Covid-19 economy. Those with job security, in contrast, and those at the top at the income scale were direct beneficiaries of substantial government and central bank support for their assets.
  • Asset Purchase Risks: Central Banks in EMDEs have sometimes deployed asset purchase programs as part of their pandemic response which has helped stabilise financial markets when targeted to market failures. However, where asset purchase programs continue to expand and are perceived to finance fiscal deficits, they may erode central bank independence, increase concerns over debt sustainability and risk currency weakness.
  • Downside Risks to Growth: These predominate and include financial distress caused by abrupt tightening, widespread corporate bankruptcies, weaker than expected recoveries across sectors, extreme weather and climate change.      Global Economic Prospects Report: World Bank

Steps Taken by India

  • The Reserve Bank of India (RBI) announced measures to provide liquidity to Micro, Small and Medium firms (MSMEs), and loosened regulatory requirements on the provisioning for non-performing assets.
  • Fiscal policy shifted in the FY 2021/22 budget toward higher expenditure targeted at healthcare and infrastructure to boost the post-pandemic recovery.

Major Reports by the World Bank

  • Ease of Doing Business.
  • Human Capital Index.
  • World Development Report.
  • Migration and Development Brief.
  • Global Economic Prospects.              Global Economic Prospects Report: World Bank

 Global Economic Prospects (GEP)

  • GEP is a World Bank Group flagship report that examines global economic developments and prospects, with a special focus on emerging market and developing economies.
  • It is issued twice a year, in January and June.
  • The January edition includes in-depth analyses of topical policy challenges while the June edition contains shorter analytical pieces.

ALSO READ : https://www.brainyias.com/global-energy-review-2021/

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