Global outlook c h a p t e r 1

A. Activity indicators
B. Balance of payments
C. Fiscal support measures, 
augmented fiscal deficit, and 
government debt
D. Total non-financial-sector credit 
and GDP growth

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C H A P T E R 1 
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Among LICs, growth is forecast to resume at a 
moderate pace, reaching 3.3 percent in 2021—less 
than two-thirds of the average pre-pandemic 
pace—and subsequently firming to 5.2 percent in 
2022 (box 1.2). This pickup in LIC activity 
assumes that external demand from key trading 
partners, particularly China, recovers as expected 
and that containment measures are gradually 
relaxed as effective vaccines are rolled out 
domestically by early 2022. Long-standing 
logistical challenges in LICs are expected to delay 
the vaccine distribution and weigh on the 
recovery. Moreover, ballooning government debt 
burdens across LICs—which rose by an estimated 
7 percentage points to 69 percent of GDP in 
2020—are envisaged to severely constrain fiscal 
policy (The Gambia, Mozambique, Zimbabwe; 
Essl et al. 2019; World Bank 2020k). Globally 
coordinated debt relief, predicated on debt 
transparency, could assist several LICs in 
providing the fiscal support and social protection 
needed to bolster the recovery (box 1.1). 
Poverty and per capita income growth
The poorest and most vulnerable countries and 
populations have been hard hit by the pandemic, 
putting several of the Sustainable Development 
Goals (SDGs) even further out of reach. The 
pandemic has reversed the downward trend in 
global poverty for the first time in a generation 
and is projected to push more than 100 million 
people into extreme poverty, even though there is 
heightened uncertainty about the ultimate 
outcome (figure 1.13.A; Lackner et al. 2021; 
World Bank 2020m). More than one-half of this 
increase is expected to occur in South Asia—where 
substantial gains in poverty reduction had 
previously been made—and about one-third in 
Sub-Saharan Africa—where four in ten people 
already live in extreme poverty.
Inequality is also likely to worsen, partly reflecting 
the fact that the pandemic is expected to have a 
disproportionately negative effect on the incomes 
of vulnerable groups (Furceri et al. 2020; ILO 
2020). These include women, migrant workers, 
those employed in lower-skilled occupations or 
informal sectors, and those with limited assets and 
thus constrained access to credit (Azcona et al. 
2020; Islam et al. 2020). Rising inequality