Global outlook c h a p t e r 1

partly 
reflecting 
distribution 
impediments. Vaccine deployment is assumed to 
moderate further in 2022, to 3.8 percent. Even by 
2022, global GDP is forecast to be 4.4 percent 
below pre-pandemic projections, with the gap in 
EMDEs nearly twice as large as in advanced 
economies, highlighting the massive economic 
costs inflicted by COVID-19 (figure 1.14.A). 
Risks to this outlook are tilted to the downside, 

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bolster a recovery in consumer and business 
confidence 
and 
buttress 
financial 
market 
sentiment. As a result, consumption is expected to 
continue to strengthen and investment to recover. 
Macroeconomic policy is assumed to remain 
accommodative during the forecast horizon, with 
continued support from monetary policy and 
deficits remaining wide despite some fiscal 
tightening. 
Risks to the outlook
The recovery expected in the baseline forecast 
could be derailed by the materialization of a 
number of risks. The spread of the virus could 
accelerate if pandemic-control measures fail or if 
there are delays in the deployment of vaccines. 
This would interrupt the already-slow recovery 
and deepen the damage to the global economy. It 
would also exacerbate existing strains—prolonged 
economic weakness could trigger a wave of 
bankruptcies; banking balance sheets could be 
further impaired; governments might be unable to 
continue providing support; and, in some 
circumstances, temporary bouts of unemployment 
and business shutdowns could become permanent.
Given the crucial importance of the progression of 
the pandemic in shaping the global outlook, a set 
of scenarios described in box 1.4 explores the 
economic impact of alternative assumptions about 
the spread of the virus and progress in 
administering vaccinations (figure 1.14.D). In the 
upside 
scenario, 
effective 
COVID-19 
management, aided by the rapid deployment of 
highly effective vaccines, could allow for markedly 
faster easing of the pandemic, triggering a sharp 
rise in consumer confidence and unleashing pent-
up demand. Industrial commodity exporters and 
countries with greater exposure to trade and 
tourism would be expected to benefit most from a 
faster resolution of the pandemic. 
In the downside scenario, new cases of COVID-
19 would remain persistently higher than in the 
baseline in many parts of the world and the 
vaccine rollout process would be slowed by 
logistical impediments and reluctance toward 
immunization. In these circumstances, global 
growth would be much more subdued, only 
recovering to 1.6 percent in 2021 and 2.5 percent 
in 2022. Advanced economies would expand a 
meager 0.6 percent in 2021, while EMDEs would 
grow by 3.1 percent—and only 1.6 percent 
excluding China.
In an even more severe downside scenario, 
renewed financial stress would contribute to