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What makes the World Bank predict that the global economy will shrink this year?

The latest Global Economic Outlook released by the World Bank on the 8th shows that the global economy has been greatly impacted by the epidemic, and it is estimated that the global economy will shrink by 5.2% this year. According to the World Bank, the economic activity of developed economies is expected to shrink by 7% in 2020 due to the serious interference of domestic demand and supply, trade and finance. Emerging market countries and developing economies are expected to contract by 2.5% this year. In the countries with the worst epidemic and relying heavily on global trade, tourism, commodity exports and external financing, this blow is the most serious.

The World Bank predicts that the global per capita income will decrease by 3.6%, and as many as 654.38 billion people in developing countries will fall into extreme poverty. The World Bank defines extreme poverty as income below $65,438 +0.90 a day. The World Bank warned that this latest forecast will be lowered if the uncertainty of epidemic situation and enterprise closure continues.

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The World Bank's Unfavorable Scenario Forecast

The World Bank report also includes an unfavorable scenario prediction, that is, the implementation time of the lockout measures will be extended by three months this year. If this happens, in 2020, developed economies will shrink by as much as 8%- 10%, and emerging markets may shrink by 5%. More enterprises will be closed permanently, global trade flow will be greatly reduced, enterprises will be laid off, and families will cut back on spending.

If this unfavorable situation comes true, we expect the recovery in 20021year to be very slow, said Ayhan Meitigos, head of the World Bank's Outlook Department. Next year, the global economic growth rate will barely start to pick up, with a growth rate of around 1.3%.

World Bank officials said that their basic scenario forecast assumed that the blockade measures such as social alienation and temporary closure of enterprises began to relax at the end of June. The report also shows that in 2020, the economies of the United States and Japan are expected to shrink by 6. 1%, the euro zone by 9. 1%, and Brazil and India by 8.0% and 3.2% respectively.

China Youth Network-World Bank predicts that the global economy will shrink by 5.2% and 654.38 billion people will fall into extreme poverty.

Beijing News-World Bank: Global economy will shrink by 5.2%