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COVID-19 Could Lead to a Lost Decade of Economic Growth

1 February 21

The coronavirus pandemic could cause more damage than one would think. According to the World Bank, it could even lead to a lost decade of economic growth. 

According to the bank, the economy was weakening even before the pandemic due to an aging population and low productivity growth. Now, the COVID-19 outbreak has just worsened the situation.

The World Bank projected that even though the global economy is set to improve this year, it will still be smaller than predicted pre-pandemic. As of now, it’s expected that coronavirus vaccines will help us return to normal life and the economy should grow 4% next year. Unfortunately, that is still around 5.3% – or $4.7 trillion – smaller for 2021 than expected pre-pandemic. 

The organization also said that even if the economy operates at full employment and capacity, the global potential growth will slow to 1.9% a year from 2020 to 2029. Weaker levels of investment, lower female employment, and a slowdown in improvement for education all have an impact on this. Meanwhile, before the pandemic hit, the potential growth was expected to be 2.1% a year. 

“The global economy appears to be emerging from one of its deepest recessions and beginning a subdued recovery,” World Bank Group president David Malpass said. “Policymakers face formidable challenges – in public health, debt management, budget policies, central banking and structural reforms – as they try to ensure that this still-fragile global recovery gains traction.”

But there is still hope. According to the bank, there are still measures that can be taken to reverse the economic damage. These include spending in infrastructure, boosting female employment, and overall diversifying the economy, so it does not rely on particular sectors.

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