The World Bank Group will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries recover from the pandemic
The World Bank (WB) has called for steps to speed up recovery from the coronavirus pandemic as shutdowns deal heavy blows to economies, especially in poorer countries.
Analytical chapters from the World Bank Group’s Global Economic Prospects report released on Tuesday suggest that developing countries and the international community can start to take steps to speed up the recovery now that the worst of the health crisis has passed.
Short-term response measures to address the health emergency and secure core public services will need to be accompanied by comprehensive policies to boost long-term growth.
In order to make future economies more resilient, many countries will require systems that can build and retain more human and physical capital during the recovery, stated the report.
The analysis was released ahead of the June 8 issuance of the full report, which will include the latest forecasts of the Bank Group for the global economy.
“The scope and speed with which the Covid-19 pandemic and economic shutdowns have devastated the poor around the world are unprecedented in modern times. Current estimates show that 60 million people could be pushed into extreme poverty in 2020. These estimates are likely to rise further, with the reopening of advanced economies the primary determinant,” said World Bank Group President David Malpass.
“Policy choices made today – including greater debt transparency to invite new investment, faster advances in digital connectivity, and a major expansion of cash safety nets for the poor – will help limit the damage and build a stronger recovery. The financing and building of productive infrastructure are among the hardest-to-solve development challenges in the post-pandemic recovery,” the president said.
“We need to see measures to speed litigation and the resolution of bankruptcies and reform the costly subsidies, monopolies and protected state-owned enterprises that have slowed development,” he added.
Deep recessions associated with the pandemic will likely worsen the ongoing slowdown in economic growth and productivity spanning decades, stated the report.
The analysis notes that measures required to protect public health have compromised an already fragile global economy, causing deep recessions in advanced economies and developing economies alike. Developing economies that rely heavily on global trade, tourism, or remittances from abroad will be particularly hard-hit.
“When the pandemic struck, many emerging and developing economies were already vulnerable due to record-high debt levels and much weaker growth. Combined with structural bottlenecks, this will amplify the long-term damage of deep recessions associated with the pandemic,” said Ceyla Pazarbasioglu, World Bank Group Vice President for Equitable Growth, Finance and Institutions.
The analysis also discusses the importance of allowing an orderly allocation of new capital toward sectors that are productive in the new post-pandemic structures that emerge.
The World Bank Group will be deploying up to $160 billion in financial support over 15 months to help more than 100 countries protect the poor and vulnerable, maintain the private sector, and bolster economic recovery. This includes $50 billion of new IDA resources through grants and highly concessional loans.