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Law360 (June 8, 2020, 8:47 PM EDT) -- The World Bank Group is projecting a 5.2% contraction in global GDP in 2020 as a result of measures imposed due to the coronavirus pandemic, with the United States' economy expected to shrink by 6.1%, according to data released Monday.
The June 2020 Global Economic Prospects report takes a granular look at what is to come in the second half of the year, when the world is likely to see the deepest economic recession since World War II, the report says.
Developed economies are expected to shrink by 7% and developing economies are likely to see a 2.5% contraction, which marks the first time in 60 years that the latter group has seen negative growth, according to the report. The World Bank further expects per capita income to fall 3.6%, which it says will push millions of people into poverty.
"The COVID-19 recession is singular in many respects and is likely to be the deepest one in advanced economies since the Second World War and the first output contraction in emerging and developing economies in at least the past six decades," World Bank Prospects Group Director M. Ayhan Kose said in a statement.
The report said that under a baseline forecast, which anticipates the COVID-19 pandemic slows down enough for economies to reopen by the middle of the year, global growth could rebound in 2021 by 4.2%. However, this outcome is uncertain, and the World Bank noted that there remains significant risk depending on how the pandemic plays out.
"The current episode has already seen by far the fastest and steepest downgrades in global growth forecasts on record," Kose said. "If the past is any guide, there may be further growth downgrades in store, implying that policymakers may need to be ready to employ additional measures to support activity."
The likely economic contraction will be so widespread, according to the World Bank, it will be the first time since 1870 that such a large portion of countries see a decline in output per capita.
Digital technologies, however, are expected to see extensive adoption across industries including financial services.
"Faster advances in digital connectivity are also necessary and should get a vital boost from the pandemic, which heightened the value of teleworking capabilities, digital information, and broad connectivity," David Malpass, World Bank Group president, said in the report. "Digital financial services are playing a transformative role in allowing new entrants into the economy and making it easier for governments to provide rapidly expandable, needs-based cash transfers."
In a report in April, the World Bank said it projects a roughly 20% decline in global remittances this year as a result of the COVID-19 pandemic and its economic knock-on effects, a fall that it said would be the largest in recent history. This decline would represent a nearly $100 billion fall in remittances, sums of money often sent by immigrant workers back to their home countries, from $554 billion in 2019 to $455 billion in 2020.
--Editing by Alanna Weissman.
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