Harare - The January 2021 World Bank Global Economic Prospects Report says recovery is likely to be subdued unless policy makers move decisively to tame the pandemic and implement investment enhancing reforms.
The report also notes that in developing countries the economic collapse experienced in 2020 is mostly likely to spill into 2021.
"Although the global economy is growing again after a 4,3 percent traction in 2020, the pandemic caused a lot of death ,illness, plunged millions into poverty and may continue to depress economic activities for a prolonged period," reads the report.
The near-term outlook remains highly uncertain, and different growth outcomes are still possible, a section of the report says.
A downside scenario in which infections continue to rise and the rollout of a vaccine is delayed could limit global growth to 1,6 percent in 2021. On the upside, scenario successful pandemic control and a rapid vaccination process will see growth accelerating to nearly five percent.
World Bank vice-president and chief economist Ms Carmen Reinhart said, “Financial fragilities in many of developing countries, as the growth shock impacts, affects vulnerable household and business balance sheets, will also need to be addressed, and this may take a while.”
In an interview with The Southern Times Business, Pan-African Chamber of Commerce board member Mr Langton Mabhanga said reinstituted lockdowns would have a knock on productivity.
"COVID-19 lockdown safety measures have put a strain on the production system and production will be by far reduced and this will significantly impact set annual targets in various sectors of the economy and consequently the set national target will be reduced", Mr Mabhanga said.
He added that low production meant lower tax revenues for governments.
"Governments have obligations that they are expected to adhere to, especially in times of crisis. It is going to be quite difficult to strike a balance between budgets and the situation at hand, hence it may require borrowing.”
He said societies had to quickly find a balance between health priorities and economic considerations.
“It is a bold step that requires orientation on how to go about the new world order and it comes with costs, and cultural and behavioural change in everyone,” he added.