Global recovery may take five years, says World Bank

The global recovery from the crisis originated by the coronavirus pandemic may take as five years, the World Bank’s chief Carmen Reinhart said.

“There will probably be a quick rebound as all the restriction measures linked to lockdowns are lifted, but a full recovery will take as much as five years,” Reinhart said in a remote intervention during a conference held in Madrid.

Reinhart said the pandemic-caused recession will last longer in some countries than in others and will exacerbate inequalities as the poorest will be harder hit by the crisis in rich countries and the poorest countries will be harder hit than richer countries.

She said global poverty rates will rise following the crisis for the first time in 20 years.

Earlier the head of the International Monetary Fund, Kristalina Georgieva said that the coronavirus pandemic will turn global economic growth “sharply negative” in 2020, triggering the worst fallout since the 1930s Great Depression.

She said the crisis would hit emerging markets and developing countries hardest of all, and those countries would then need hundreds of billions of dollars in foreign aid.

Georgieva said the pandemic was hitting both rich and poor countries, but many in Africa, Asia and Latin America were at higher risk because they had weaker health systems. They were also unable to implement social distancing in their densely populated cities and poverty-stricken slums.

She said investors had already removed some $100bn in capital from those economies, more than three times the outflow seen during the same period of the global financial crisis.