The coronavirus will lead the world into the greatest crisis since World War II

The World Bank has warned this Monday of the enormous magnitude of the crisis caused by the coronavirus pandemic, which will lead the global economy to fall by 5.2% this year, something not seen since the end of World War II in 1945, as a result of the "rapid and enormous" blow caused by the impact of the COVID-19.  

The bank warned that never before had so many countries gone into recession at once, not even during the Great Depression of 1930 and after the two World Wars of the last century. "These are deeply sobering prospects, with a crisis that is likely to leave lasting scars and pose giant global challenges," Ceyla Pazarbasioglu, WB Vice President for Equitable Growth, said in a conference call. A modest 4.2% rebound is expected by 2021, but subject to the high level of uncertainty that exists today. Per capita income is expected to fall by 3.6% globally, which will mean that between 70 and 100 million people may fall below the extreme poverty line (less than $1.90 a day) 

The World Bank's forecasts are more pessimistic than those advanced by the International Monetary Fund (IMF) in April, when it estimated a global contraction of 3 %. However, the Fund's managing director, Kristalina Georgieva, has already advanced that her new calculations, which are due to be released on June 24, will "most likely" show a greater drop than expected two months ago. 

All regions of the world will fall into sharp recessions, except Asia, which will grow by 0.5%, boosted by China's recovery in the second half of the year, with an estimated growth rate of 1%, although the Asian giant's economic record this year will be the lowest in 45 years. In contrast, Latin America will be the region with the steepest decline, 7.2%, the largest in more than two decades: Brazil is expected to contract by 8% this year, Mexico by 7.5% and Argentina by 7.3%. 

The other three major regional economies, which had pulled back on growth in recent years, will also suffer significant recessions in 2020: Colombia -4.9%, Chile -4.3% and Peru -12%.  Economic activity in Central America will also fall by 3.6% due to mobility restrictions, lower remittances and a drop in tourist arrivals, as well as lower prices for agricultural products. 

The United States, on the other hand, will contract by 6.1% this year and the Euro Zone by 9.1%, according to the report of the world's leading development institution. These forecasts are framed in a scenario of withdrawal of the pandemic that allows the lifting of the measures of confinement and restriction of mobility in the middle of the year in the advanced economies and a little later, so they could vary significantly in the future. 

"The current crisis episode has already shown the most abrupt and rapid downward revision since records began. If the past is any guide, there may be further reductions in forecasts in the future, which means that policymakers must be prepared to deploy additional measures to support activity," added Ayhan Kose, director of the World Bank's Outlook report. 

Finally, he sounded the alarm about the limited room for maneuver in emerging economies compared to the Great Recession of 2008-2010. "In the last global recession, in 2009, many emerging economies were able to implement large fiscal and monetary response packages. Today, however, they are less well prepared to weather a downturn in the global economy and must deal with a severe health crisis at the same time," Kose said.