World Bank lifts global growth outlook to 5.6% on U.S., China rebounds

Jun 09 , 2021. 11 hours ago – 22:35 KYODO NEWS

World Bank Group logo. (NurPhoto/Getty/Kyodo)

WASHINGTON – The World Bank on Tuesday forecast global growth for this year at 5.6 percent, up 1.5 percentage points from its estimate in January as the United States and China showed robust rebounds from the coronavirus pandemic-induced downturn.

The Washington-based lender also revised up Japan’s growth for this year by 0.4 point to 2.9 percent on the back of fiscal support measures, but noted that the economic benefits from this summer’s Tokyo Olympics will be limited due to the absence of foreign spectators.

While emphasizing that this year’s global growth outlook will mark the strongest recovery from any of the global recessions in the past 80 years, the World Bank warned in its semiannual Global Economic Prospects report that the rebound is “highly uneven” amid “highly unequal” coronavirus vaccine access.

“Growth is concentrated in a few major economies, with most emerging market and developing economies lagging behind,” the report said.

While about 90 percent of advanced economies are expected to regain their pre-pandemic per capita income levels by 2022, only about one-third of emerging market and developing economies are expected to do so, it added.

Global growth, which is estimated to have contracted 3.5 percent last year due to the pandemic, is projected to rise to 4.3 percent next year, a 0.5 point upgrade from the earlier estimate.

Among major economies, U.S. growth is expected to reach 6.8 percent this year, its fastest pace since 1984, owing to large-scale fiscal support, mass vaccination efforts and an ongoing easing of pandemic restrictions, according to the World Bank.

In March, U.S. President Joe Biden signed into law a $1.9 trillion stimulus bill, bringing the total fiscal support provided since the beginning of the pandemic last year to over one-quarter of the gross domestic product, it said.

But U.S. growth next year will soften to 4.2 percent amid diminishing fiscal support.

Japan’s growth is expected to moderate to 2.6 percent in 2022, held back by lingering weakness in consumption amid subdued wage growth, the report said.

China, after expanding 2.3 percent in 2020, is expected to see its growth jump to 8.5 percent in 2021, an upward revision of 0.6 point on expectations of stronger foreign demand. Its growth is expected to slow to 5.4 percent in 2022.

The eurozone economy is believed to grow 4.2 percent and 4.4 percent in 2021 and 2022, respectively.

Global trade is forecast to grow 8.3 percent this year after plunging by the same percentage a year earlier.