Global economy to grow 4.7pc in 2021: Unctad

19 March, 2021 12:00 AM printer

NEW YORK: Global economic growth will accelerate to 4.7 per cent this year as widespread vaccine distribution is expected to help economies resume activities, according to a United Nations report.

This optimistic scenario is based on three assumptions – improved vaccination and disease containment in advanced and middle-income countries, a speedy transition from economic relief policies to recovery policies in the largest economies and no financial crash of global significance, the United Nations Conference on Trade and Development said on Thursday, report agencies.

Even in this optimistic scenario, the world economy will still be 5 per cent below its pre-Covid-19 growth rate by the end of this year.

The Covid-19 pandemic caused a loss of global output in 2020 and a destruction of income at an estimated $5.8 trillion, the UN agency said. Even the most optimistic projections for the bounce back of growth will not cover the shortfall of income for several years, it added.

The global health crisis led to movement restrictions across most of the world’s major economies, paralysed international travel, hit manufacturing bases and disrupted supply chains, plunging the global economy into a deep recession.

Global trade recovered in the fourth quarter of 2020, narrowing its overall decline for the full year to 9 per cent, Unctad said in a report in February. Overall, the world economy posted its sharpest annual drop in output since 1940, with no region spared.

The International Labour Organisation estimated that the crisis triggered a loss of 255 million full-time jobs worldwide.

“International trade dropped, quarter-on-quarter, by around 12 per cent in the second quarter of 2020 but has had an immediate V-shaped recovery with variations across developing countries and regions,” Unctad said.

The scarcity of foreign exchange in many developing countries – necessary to make debt and import payments, including for medical supplies – was compounded by a sharp fall in export earnings following the movement restrictions, the disruption of supply chains and the collapse of commodity prices, the UN agency said.