11-01-2021 | 12:20 PM
Global Economic Prospects (GEP) 2020
Context
Recently, World Bank has released its Global Economic Prospects (GEP) 2020 report.
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.
Key Highlights of the Report
According to the report the Indian economy is to contract by 9.6% in 2020-21. The Indian economy is to recover 5.4 percent in 2021-22. The contraction in the Indian economy would be primarily due to a sharp decline in household spending and private investment.
The informal sector which accounts to four fifth of employment in the country has been severely affected.
On the other hand, the world economy is to expand by 4% in 2021.
The services and manufacturing sector are gaining Momentum. According to World Bank India is facing its first technical recessionary phase.
When the GDP growth is negative for two consecutive quarters or more than the period it is called technical recessionary phase.
In India, the Gross Domestic Product declined by 23.9 percent between April and June quarter. The Gross Domestic Product growth rate contracted by 7.5 % during the July and September quarter. This clearly shows that the GDP growth of India has been negative for two consecutive quarters. Thus, India is in a technical recessionary phase.
Report argues that the Central banks in some emerging market and developing economies have employed asset purchase programs in response to pandemic induced economic crisis. However, these programs may erode central bank operational independence, risk currency weakness which can fuel inflation expectations, and debt unsustainability.
Report also states that there is ‘Dramatic’ 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.
About the World Bank
The World Bank Group (WBG) is a family of five international organizations that make leveraged loans to developing countries.
It is the largest development bank in the world and is an observer at the United Nations Development Group.
The bank is based in Washington, D.C.
The bank's stated mission is to achieve the twin goals of ending extreme poverty and building shared prosperity.
Names of Reports published by World Bank are:
Ease of Doing Business
World Development Report
Multidimensional Poverty Index
Human capital Index
Universal Health Coverage Report
Logistic performance Index
Global Economic Prospects
