WASHINGTON : Global growth is surging again and this year is likely to mark the strongest post-recession rebound in 80 years, with global GDP expansion likely at 5.6 percent; however, the situation is not so in 74 countries eligible to borrow from the World Bank’s International Development Association (IDA).
This was stated in a World Bank’s blog that is part of a series on ways to ensure a resilient recovery from Covid-19 in the world’s poorest countries.
These 74 countries are the world’s poorest countries and account for roughly half of all people living on less than $1.90 a day. For them, the global “recovery” is simply nowhere to be seen. In 2021, their growth will be the slowest in more than two decades (except for 2020), reversing years of progress in poverty reduction. For them, the harm will not be repaired quickly. By 2030, one out of every four people here will still be living below the international poverty line.
Maternal and child mortality is on the upswing in IDA countries because of reduced access to health services and food. Conflict and instability are also compounding the challenges for some countries. “Even as the wealthiest nations begin to enjoy a return to prosperity and a semblance of normality, the pandemic continues to ravage the poorest countries.”
These countries will need significant help to dig out of the Covid-19 recession. In 2020, the pandemic all but halted economic growth in IDA countries and caused per capita income to shrink by 2.3 percent. “Our analysis indicates their growth will lag that of advanced economies by about 2 percentage points a year on average from 2021 through 2023, widening an already large gap between the richest and poorest countries.”
A significant gap has also opened up in the health response to Covid-19: because of supply shortages, procurement struggles, and limited financing, the pace of vaccinations has been alarmingly slow. As of July, only three doses of Covid-19 vaccine per every 100 people had been distributed. That amounts to less than one-tenth the rate in advanced economies.
To return to the path to convergence with wealthier economies, IDA countries will need up to $376 billion in additional financing through 2025—above and beyond the $429 billion in regular external financing needs. Many of these countries are already heavily indebted, so the option to borrow is limited. Given the fiscal constraints of most countries in the pandemic’s wake, overseas development assistance is likely to remain flat or even decline. Under the circumstances, IDA countries increasingly will need support in the form of grants or zero-interest loans.
For extinguishing Covid-19 for good and also for putting the poorest economies on the right track to overcome deep challenges of development confronting them in the long term, a first step will be to speed up the delivery of vaccines. The next step is to put in place an ambitious package of policy reforms—to facilitate the transition of labour and capital to high-growth sectors, lower trade costs, and encourage environmentally sustainable investments—that can deliver a green, resilient, and inclusive recovery. TLTP
