COVID-19 has delivered an enormous global shock, leading to steep recessions in many countries in decades. While the ultimate outcome is still uncertain, the pandemic will result in contractions across the vast majority of emerging market and developing economies.
The baseline forecast envisions a 5.2 percent contraction in global GDP in 2020—the deepest global recession in decades.
Per capita incomes:
It will also do lasting damage to labor productivity and potential output.
The immediate policy priorities are to alleviate the human costs and attenuate the near- term economic losses in most emerging and developing economies will shrink this year. The pandemic highlights the urgent need for policy action to cushion its consequences, protect vulnerable populations, and improve countries’ capacity to cope with similar future events. It is also critical to address the challenges posed by informality and limited safety nets and undertake reforms that enable strong and sustainable growth.
The rapid rise of COVID-19 cases, together with the wide range of measures to slow the spread of the virus, has slowed economic activity precipitously in many EMDEs. Growth forecasts for all regions have been severely downgraded. Many countries have avoided more adverse outcomes through sizable fiscal and monetary policy support. Despite these measures, per capita incomes in all EMDE regions are expected to contract in 2020, likely causing many millions to fall back into poverty.