Global outlook c h a p t e r 1

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