We have experienced the most serious economic crisis in 150 years, the World Bank says

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The new coronavirus, which has not been seen since World War II, will shrink the world economy by 5.2% this year. But since the Great Depression of the 1870s, the World Bank pointed out on Monday that it was the number of countries in recession that made the crisis the worst. Despite the massive government support, it hasn’t affected so many countries for 150 years, according to new forecasts from agencies released on Monday.

“Unprecedented financial and fiscal stimulus has been seen not only in developed countries, but also in emerging and developing markets,” Seira Pazarbasiogul, vice president of equity growth and finance, said in a telephone conference. Said. But she believes it will take longer to recover. “This is a catastrophic shock for all economies that require urgent global action,” she added. “This is a crisis that will leave scars for a long time and pose immeasurable challenges on a global scale.”

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More than 400,000 people died

The World Bank estimates that 70 to 100 million people can fall into extreme poverty, erasing progress over the last three years in the fight against poverty. Prior to the health crisis, the agency predicted that the proportion of the world’s population living on less than $ 1.90 a day would decline further in 2020. The pandemic that occurred in China at the end of last year is affecting the majority of countries in the world.

More than 400,000 people have died, according to official statistics from Agence France-Presse. Many countries have taken containment measures to succumb to their economies in order to control pollution and, in particular, prevent the health system from being completely overwhelmed. And while the World Bank predicts a rebound in 2021, the risk of a second wave of infection in the absence of a vaccine has not been ruled out and could impair recovery.

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China, exception

China, the world’s second-largest economy, is almost the only major economy to grow this year, but its slowdown is likely to hinder the recovery of developing countries, Breton warned. The World Bank now estimates that the reduction will reach 7% in developed countries alone, where consumption and supply have collapsed due to paralysis in the transportation, hotel, restaurant and leisure sectors. GDP in emerging markets and developing countries is expected to decline by 2.5%, “a reduction for the countries of this group for the first time in at least 60 years.”

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At the conference call, Aihan Kose, director of development prospects, pointed out the difficulty of predicting a crisis similar to a natural disaster. Therefore, the agency provided the worst scenario. If a second wave of the pandemic occurs, or if authorities are forced to resume containment measures, global GDP could shrink by 8%. “Interruptions in these activities could cause businesses to suspend their activities and repay their debts,” the report’s author warns, but private-sector debt is already a concern before the health crisis. rice field.

Finally, even with a 4.2% recovery next year, “in many countries, the severe recession of Covid-19 is expected to weigh on growth over the years to come.” The book states. Last week, World Bank Governor David Malpass lamented a lack of investment to slow recovery.