36
BOX 1.3
Regional perspectives: Recent developments and outlook
(continued)
financial distress related to an abrupt tightening of
financing conditions or widespread corporate bankrupt-
cies, extreme weather and climate change, weaker-than-
expected recoveries in key partner economies, and a
worsening of policy- and security-related uncertainty.
Sub-Saharan Africa.
Activity in the region is estimated to
have shrunk by 3.7 percent last year, setting living
standards in many countries back by a decade. Growth is
forecast to resume at a moderate pace of 2.9 percent in
2021—essentially zero in per capita terms and well below
previous projections. COVID-19 is likely to weigh on
growth in SSA for an extended period, as the rollout of
vaccines in the region is expected to lag that of major
economies and many other EMDEs. Millions of people in
the region could be pushed into extreme poverty in 2020
and 2021. Risks to the regional outlook are tilted to the
downside, and include weaker-than-expected recoveries in
key trading partners, logistical hurdles that further impede
vaccine distribution, and scarring to productivity that
weakens potential growth and income over the longer
term.
A. Regional growth
B. Reversals of EMDE per capita income
gains in 2020, by number of years
C. Gaps with pre-pandemic projections
by 2022
FIGURE B1.3.1
Regional growth
The pandemic has had a devastating impact on all emerging market and developing economy (EMDE) regions, which could
worsen further if a downside scenario materializes. The downturn has been particularly severe in Latin America and South
Asia, which have suffered from large outbreaks, and regions more vulnerable to global spillovers through, for example,
tourism and industrial commodity exports. In about a quarter of EMDEs, COVID-19 has reversed a decade or more of per
capita income gains. COVID-19 is expected to leave lasting economic scars that will likely keep the level of activity from
returning to its pre-pandemic trend.
Source
: World Bank.
Note:
EAP = East Asia and Pacific, ECA = Europe and Central Asia, LAC = Latin America and the Caribbean, SAR = South Asia, SSA = Sub-Saharan Africa.
A. Bars denote latest forecast; diamonds denote regional growth downside scenarios. Aggregate growth rates calculated using GDP weights at 2010 prices and market
exchange rates. Since largest economies account for about 50 percent of GDP in some regions, weighted averages predominantly reflect the developments in the
largest economies in each region.
B. Aggregates calculated using U.S. dollar GDP per capita at 2010 prices and market exchange rates. Figure shows the percentage of EMDEs by number of years of
lost per capita income gains, measured as the difference between 2020 and the latest year of per capita income that is below 2020 value over the 2000-19 period.
C. Figure shows the gaps between the current projections and the forecasts in the January 2020 edition of the
Global Economic Prospects
report.
Click here to download data and charts.
growing wave of business insolvencies. Survey data
suggest that a high proportion of businesses have
limited cash on hand and have either fallen into
arrears or will soon do so (Apedo-Amah et al.
2020). As regulatory forbearance wanes, continued
weakness of household incomes and corporate
earnings risks triggering a wave of bankruptcies,
which could have a heavy and long-lasting impact
on unemployment (Banerjee, Kharroubi, and
Lewrick 2020). This would erode capital buffers
and slow the flow of credit, increasing the
probability of financial crises. EMDEs that
entered the pandemic with thinly capitalized
banks and with limited policy space to provide
capital support to the banking sector are
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