Global outlook c h a p t e r 1

participation in global value chains, boost labor 
productivity, and strengthen growth, if accompanied by 
policies that foster competition and attract domestic and 
foreign investments. A widespread use of digital 
technologies could also spur sectoral productivity gains, 
with positive spillovers among LICs. 
strengthen as the COVID-19 outbreak is brought under 
control and as exports, foreign direct investment, and 
remittance inflows gradually recover. Improving exports 
are also expected to support the recovery in Rwanda, along 
with efforts to improve public service delivery and 
efficiency through performance-based salary incentives, 
increased training and capacity building of public servants, 
and streamlining of operational procedures. The growth 
pickup in Guinea is expected to be underpinned by 
continued mining-related infrastructure investment and 
the implementation of structural reforms to strengthen 
governance and bolster the business climate.
The pandemic has severely set back living standards. Per 
capita income levels in LICs fell by 3.6 percent last year 
and are expected to edge up by an average of only 1.6 
percent in 2021-22 (figure B1.2.2.B). Among fragile and 
conflict-affected LICs—where the incidence of extreme 
poverty is highest—per capita incomes declined 6.4 
percent last year and are projected to fall by a further 0.3 
percent this year, before firming only marginally in 2022. 
As a result of the deterioration in living standards, extreme 
poverty headcounts among LICs are projected to increase 
by tens of millions of people cumulatively in 2020 and 
2021, while the share of the population living in extreme 
poverty could rise by as much as 4 percentage points—
reversing five years of progress in poverty reduction (figure 
B1.2.2.C; World Bank 2020m). 
Risks 
Risks to the outlook are tilted firmly to the downside. 
Although the growth rebound is expected to be stronger 
than previously projected in China, forecast downgrades in 
other major economies and key LIC trading partners—
notably the euro area and the United States—could 
further dampen the rebound. Renewed headwinds to 
global growth would weigh on the recovery in many LICs 
through subdued export demand and reduced investment.
The pandemic may persist for longer than expected, 
perhaps because of setbacks in the production, and rollout 
of vaccines, weighing further on the global economy. 
Delays to the distribution of vaccines could be 
compounded in LICs by the logistical challenges these 
countries are likely to face in vaccine distribution. Many 
LICs also have large informal sectors, which raises the 
likelihood that outbreaks of infections persist because 
informal workers often operate in close proximity to each 
other in crowded spaces.